§ The Secretary of State for Social Services (Mr. Patrick Jenkin)
I beg to move, That the draft Social Security Benefits Up-Rating Order 1980, which was laid before this House on 17th July be approved.
The House will be grateful to you, Mr. Speaker, for your recognition that it would be helpful to discuss all the orders and prayers together. The House will, I think recognise that these fall into three main groups: first, there are the uprating instruments, that is to say, those increasing the levels of pensions, child benefit, family income supplement and other benefits next November; secondly, the instruments giving effect to the first stage of the reform of the supplementary benefit system provided for in the Social Security Act; and, thirdly, a small group of miscellaneous instruments.
I turn straight away to the uprating instruments. In this context I should like to draw the House's attention to the report of the Government Actuary, which was published last week.
The uprating orders before the House raise expenditure on social security benefits by £3,000 million in a full year. The retirement pension will go up from £23.30 a week to £2715 for a single person and the married rate will go up from £37.30 to £43.45 a week. The widows allowance goes up from £32.60 a week to £3800. The attendance allowance goes up from £18.60 to £21.65 and the mobility allowance from £1200 to £14–50. The full list of increases is to be found in the appendix to the Government Actuary's report.
Mr. Speaker, £3,000 million is a substantial sum by any standards, but, as the House is well aware—for we have already in this Session debated the issues at great length—even that sum is the result of making some savings by increasing some benefits by five percentage points less than the main long-term benefits and by making the other savings which the House has approved in the Social Security (No. 2) Act.
This Government have had to face the economic facts of life. We have had to come to terms with the reality of the world 1055 that we live in, in a way that our predecessors, unless compelled by the International Monetary Fund, did not. We had to face hard decisions which were made all the harder because of their failure to act in time. We have had to find savings both in national insurance benefits and in the social security benefits, which are a charge on the Consolidated Fund, in order to contribute to the Government's overall economic objectives.
§ Mr. Jenkin
I have only just started, and I should like to continue.
As well as the reduced uprating for short-term beneficiaries and invalidity pensioners, we are uprating other pensions and other long-term benefits in line with prices rather than earnings, and we have had to put back the uprating date to 24 November. Despite the changes, we have done as much as we can for those most in need. We have protected the position of retirement pensioners and widows by keeping the link with prices. We have maintained "the safety net" by raising the supplementary allowance in line with prices while aligning the supplementary pension with the retirement pension; and we have given extra help to the severely disabled by raising mobility allowance by substantially more than prices.
The main increases in the orders are based on a forecast that prices will rise by about 16½ per cent. between the up-rating in November 1979 and the up-rating date in November 1980. This was the figure announced by the Chancellor of the Exchequer at the time of the Budget last March, but that, in law, was not the critical date. The law does not permit me to rely on any forecast made last March. The House will, I think, recognise that the law quite clearly requires me to make the best estimate I can of what has to be done next November to restore the value of the benefits in question. That estimate has to be made at the time that the orders are laid. I can tell the House that had I been driven to the conclusion on the evidence available to me that the Budget estimate was too low and that 16frac12; per cent. would be insufficient to restore the value of the pension in November, I should, as the law 1056 stands, have had to come to the House and lay an order consistent with that higher figure. This has not always been clear in the past, because generally the laying of the order has followed closely on the Budget announcement. This year, because the Budget was early, and because the order could not be laid until the two social security Bills had been enacted, there has been a much longer gap. But it is the date of the laying of the order that counts in law.
In consultation with my right hon. and learned Friend the Chancellor of the Exchequer, I have had to consider the whole matter with extreme care. Some outside forecasters have been suggesting that the Budget forecasts were too optimistic, and I will confess to the House, as I indicated late one night in Standing Committee, that earlier this year I began to wonder whether these forecasters were not right—[Interruption.] Labour Members ought to be careful about slips of the tongue. I never understood why that seemed at the time greatly to excite the hon. Member for Birmingham, Perry Barr (Mr. Rooker). However, since then the picture has begun to look better. In contrast to the forecasts made even only a couple of months ago, the outside forecasters are now accepting that there will indeed be a significant deceleration in the rate of inflation.
The House will have seen an article in the Financial Times on 12 July which said:The outlook for inflation has undoubtedly improved. Most economists would now agree with the prediction made by the Chancellor on Thursday, that despite the setbacks of the last wage round, inflation will fall back to 16½ per cent. by November, as the Treasury had forecast.
§ Mr. Bennett
If the Secretary of State is suggesting that there should be a 16½ per cent. uprating, does he accept that, based on a 54-week year, that assumes only a 16 per cent. inflation rate? Therefore, what is the Secretary of State actually assuming? Does he expect the inflation rate to be 16 per cent. or 16½ per cent?
§ Mr. Jenkin
I have made it absolutely clear, and it has been made clear in the Budget Statement and in all the debates that we have had since, that the statutory figure must apply between one uprating 1057 date and the next. That is the basis of the forecasts on which we have now laid these orders.
The June RPI figure at 21 per cent. was a reduction on that for May, which was 21.9 per cent. Next month, the effect of the increases in VAT in 1979 will come out of the index, causing, as the Chancellor told the House the other day, a substantial reduction in the year-on-year figure.
But that is not all. Hon. Members will have seen the recent CBI survey showing a very large drop in the proportion of respondents expecting to raise prices in the next four months—the lowest figure since 1973. Moreover, the rate of increase in the wholesale output price index has been falling each month since January and that, too, is an important lead indicator for retail prices. There is also increasing evidence that imported commodity prices are starting to fall.
In the light of all these factors and on the basis of the best advice available to me, I am now satisfied that a 16.5 per cent. increase by 24 November next is the best estimate that I can make of the sum needed to restore the value of the benefits in question to that which they held at the time of the last uprating. That, therefore, is the figure on which the increase in retirement pension and other long-term benefits is based, while invalidity benefit and the short-term benefits will go up by 11½ per cent., the 5 per cent. abatement being in lieu of full taxation of these benefits.
§ Mr. Stanley Orme (Salford, West)
In another place Baroness Young referred to the fact that if there was a shortfall the Government would have to take that into account. Will the Secretary of State tell the House now whether the Government will make good any shortfall on the 16½ per cent.?
§ Mr. Jenkin
Of course I cannot guarantee that 16½ per cent. will turn out to be precisely right. That is the best estimate that I can make at present. If it proves to be too low, I assure the House that we will give serious consideration next year to making good from then on any significant shortfall, having regard to economic and other circumstances then. No Government can be expected to give an absolute guarantee that they will make good any significant 1058 shortfall, come what may—[Hon. Members: "Why not?"]. Our predecessors were very careful never to give any such undertaking.
§ Mr. Jenkin
The right hon. Member says that he made it good, but on the contrary it was we who made it good last year. I hope that the assurance that I have just given the House will help to allay any anxieties that may exist.
As I have said, I am now satisfied that a 16½ per cent. increase is right, and that is the figure on which the increase in benefits is based, including those that are subject to 5 per cent. abatement.
§ Mr. Reginald Freeson (Brent, East)
Even the Budget forecasts accepted officially a possible margin of error of up to 2 per cent. on that 16½ per cent. How can the right hon. Gentleman be so confident all these months later that a figure of 16½ per cent. quoted at Budget time, which had a margin of error of up to 2 per cent. admitted by the Treasury, is now an acceptable figure for next November?
§ Mr. Jenkin
The right hon. Gentleman cannot have listened to what I said at the beginning of my speech. The critical date in law is not the date of the Budget, when the announcement was made, but the date on which I lay the orders. I am grateful to have the support of the right hon. Member for Norwich, North (Mr. Ennals). That is the date on which I must make the estimate on which the uprating figure is based. We are now less than five months away from November. At Budget time we were nine months away. Because we are now nearer the date, forecasts can be made with greater certainty. I am not saying with absolute certainty that this will be a fact, but that is the best estimate that I can make. If it is challenged, presumably in proceedings before the courts, I shall have to give evidence to justify not only the reasons for my decision but my bona fides. I hope that that will be accepted.
On the question of the invalidity benefit. I remind the House that the Government have undertaken that when that benefit and its industrial injuries counterpart—the unemployability supplement—are brought fully into taxation, subject to the availability of resources, the benefit will be 1059 restored to the same level as the retirement pension.
I now come to the Government Actuary's report, which, not surprisingly, has aroused some interest, focused on the forecast surplus of £687 million in the national insurance fund over the financial year 1980–81. I see from the press that some right hon. and hon. Members opposite have leapt to the conclusion that, far from making cuts in the social security programme, we should be able to expand it. The hon. Member for Wolverhampton, North-East (Mrs. Short) told an audience the other day that the surplus could be used to finance her Committee's report on perinatal mortality. No doubt we shall have all sorts of other interesting suggestions about the surplus during the course of this debate.
But all this is entirely to misunderstand the nature of the Government Actuary's figures. First, there is the sheer uncertainty of such forecasts. [Interruption.] The right hon. Member for Salford, West (Mr. Orme) wisely did not join in the mirth. He has held responsibilities in this field and he is as aware as I am how difficult it is to pinpoint the surplus accurately. Just look, for instance, at what happened in 1979–80.
In December 1978, when our predecessors fixed the national insurance contribution rates for 1979–80, basing himself on the assumptions he was given then about earnings, prices and unemployment, the Government Actuary forecast a small surplus for the year of £34 million. Then in July last year we set the benefit increases from 1979, and the Government Actuary was forecasting much the same figure—£35 million. However, that was entirely fortuitous, because it was the product of substantial variations from the earlier forecast which cancelled each other out. By November last year the picture had changed. The forecast surplus for that year was £349 million, which broadly reflected three factors—income from contributions was up because earnings were rising faster than forecast, unemployment was lower than forecast, and interest on the fund's investments was higher than forecast. That was last November.
The latest report shows what actually happened in that year—a surplus not of £34 million but of £542 million. Leaving 1060 aside technical factors, that further increase is due to even higher earnings than assumed in November and also something that no one foresaw—reduced sickness claims.
§ Mr. David Ennals (Norwich, North)
The right hon. Gentleman was seeking to compare this extraordinary disparity and previous disparities. An estimate may be made at one time and the figures can prove to be different. However, two factors are very different. In order to produce this high figure, the right hon. Gentleman increased the percentage of contribution, which we did not. He thereby made his own contribution to inflation. Secondly, we used the national insurance fund to increase benefits and not to abate them, to use the right hon. Gentleman's own word.
§ Mr. Jenkin
Although no doubt of interest, both those points are totally irrelevant. One simply cannot regard the surplus of £687 million as a surplus to be spent on reducing contributions or increasing benefits.
The same fluctuations occurred in earlier years, and it is not hard to see why. The surplus or deficit on a year's working is the difference between two huge aggregates—the income from contributions and other sources, and the payment of benefits. Quite small percentage changes in each of those aggregates can lead to large fluctuations in the surplus, and can turn a surplus into a deficit. I make that point so that the House can see that it would be wildly irresponsible to regard that forecast surplus as a firm foundation for increasing expenditure.
§ Mr. Andrew F. Bennett
The Minister is saying that he does not believe that the Government Actuary has it right, but he is putting through these orders on the basis of what he believes will happen. Why is that likely to be more accurate than the Government Actuary's estimate?
§ Mr. Jenkin
The hon. Gentleman has not understood the basis on which the Government Actuary works. He is given a number of assumptions. Governments of both parties have made clear that those assumptions are not forecasts. They are assumptions on which he is asked to make his actuarial calculations and estimate what is likely to happen to the movement of the surplus and the fund. In fixing the 1061 16½ per cent. I have made the best forecast that I can of what is likely to be the position.
To base continuing spending on what may be a one-year flash-in-the-pan surplus, as has been suggested, would be utterly wrong. It would be crazy. Even if we had a surplus of £687 million in the working of the fund in 1980–81, it would be less than the surplus that the right hon. Gentleman had in 1976–77. It was then £928 million. We had no suggestions then from the Government that they would increase expenditure.
§ Mr. Jenkin
That figure, moreover, is in cash terms. If one looks at the estimated surplus as a percentage of the payments from the fund—the outgo—one can see that it is a much smaller margin than in earlier years. In 1974–75, under a Labour Government, the surplus, as a percentage of outgo, was 12½ per cent. In 1976–77, despite the huge figure of £928 million, the surplus as a percentage fell to 11½ per cent. This year's estimated figure of £687 million is not 12½ or 11½ per cent.; it is less than 4½ per cent. of the estimated outgo. Far from it representing an unexpected windfall bonanza, some of my hon. Friends may wonder whether we are cutting it a bit fine. Of course we shall have to look at the updated forecast next November, when we come to set next year's contribution rates.
Finally, we should consider the surplus in relation to the whole fund. The balance of the fund has been steadily falling over the years in terms of benefits. In 1960 the fund represented 86 weeks' worth of benefit. By 1970 it had fallen to 26 weeks' worth, and it is now about 18 weeks' worth. That is the margin in the fund available to meet emergencies, and the House will recognise that it is not very big. As I have explained, the forecast surplus represents a smaller proportion of the year's outgo than in the previous year. Therefore, as has been made clear in the Government's Actuary's report, the consequence is that "as a working balance the fund is nevertheless estimated to decline in the year in relative terms".
For all those reasons, I have to make it abundantly clear to the House and the 1062 country that the forecasts surplus cannot in any way affect the decisions that the Government and the House have to take about restraining expenditure on the social security programme. That programme is estimated to take about 27 per cent. of total public spending, and it would be unrealistic to imagine that, over a period when the Government are seeking substantially to reduce public spending as a proportion of the national product, the social security programme could be exempted. It could not, and the House, albeit with reluctance, has already recognised that.
I must, moreover, make the point that many of the changes made in the No. 2 Act do not take effect until next year or the year following. I can only repeat what I made clear in particular to my hon. Friend the Member for Chippenham (Mr. Needham) at the Report stage of the Bill—that just how the balance is to be worked out for 1982 and beyond between contributions, benefits and surplus will be for the Government to decide when we see the Actuary's report for 1982–83, that is to say, around the autumn of 1981.
Let me repeat that there is nothing in the Government Actuary's report that causes us in any way to modify our view, which was accepted by the House at the time of the Budget, that it was only prudent and responsible to reduce the cost of the social security programme.
The instruments before us represent the implementation of the changes that were forecast at the time of the Budget. The House will by now be familiar with the details of those, and, with one or two exceptions, I do not need to go into them further.
However, I wish to say a word about child benefit, not least because my hon. Friend the Member for Woolwich, West (Mr. Bottomley) and others have taken a consistent and close interest in the matter. Here again the proposed increases are in line with the announcement in the Budget. Child benefit goes up 75p to £4.75 per child, and the premium for one-parent families goes up by 50p to £3 per family. The increase will cost £420 million in a full year, net of offsets against other benefits, and brings the total annual expenditure on child benefit to £3,300 million a year. I realise that that is not as much as some hon. Members hoped 1063 for, but it is as much as the Government feel can be afforded at present.
The House will expect me to say something about our attitude to the future of child benefit. Many hon. Members have properly expressed concern about the level of support for working families with children. I therefore take the opportunity to reaffirm the Government's commitment to family support. We are committed to the child benefit system, and it is our intention, subject to economic and other circumstances, to uprate child benefit each year to maintain its value.
Child benefit does not, of course, stand alone. Family income supplement plays a key role as a benefit aimed at low-income families in work. Because of the need to retain incentives for such families, the Government are making proportionately larger increases in FIS than in most other benefits. The details are in the regulations and provide for an increase in the maximum weekly rate for a one-child family from £13.50 to £17, with a further £1.50 for each additional child instead of the existing £1. From November, because of those increases, we anticipate the average number receiving FIS will rise to about 95,000 families compared with around 85,000 this year. Perhaps most significantly, the average weekly payment will rise to about £10 next year—almost exactly double the average weekly rate when we took office in May 1979.
Next, there are two miscellaneous instruments. One deals with the Christmas bonus, which we are repeating this year, as Conservative Administrations have done each year since we introduced it. I know that the bonus is greatly welcomed by pensioners and others who receive it who find even this modest help—and it is only modest—around Christmas most useful. The Social Security (Benefit) (Married Women and Widows Special Provisions) Amendment Regulations make some technical changes that have been approved by the National Insurance Advisory Committee.
§ Mr. Tristan Garel-Jones (Watford)
My right hon. Friend is right to stress how much the Christmas bonus is appreciated, but will he take on board for the coming years that unless we are able to increase the bonus significantly—I 1064 would suggest doubling it—within the next two or three years, it will begin to become almost meaningless?
§ Mr. Jenkin
That is a factor of which Ministers are aware, but I can give absolutely no undertaking to the House in response to my hon. Friend's plea for a doubling of the bonus.
§ Mr. Ennals
Does the right hon. Gentleman agree that as pensioners have had a 54-week year, instead of a 52-week year, the Christmas bonus is worth nothing?
§ Mr. Jenkin
I want to reassure the House that the married women and widows regulations do no more than bring the law into line with what both we and our predecessors thought had always been the position.
I turn to the rest of the regulations bringing into effect the first stage of the reform to the supplementary benefits scheme. I can deal with them rather more briefly. I have no doubt that many hon. Members will wish to raise detailed points on the regulations and my right hon. Friend, the Minister for Social Security, who hopes to catch your eye, Mr. Deputy Speaker, will do his best to answer them at the end of the debate.
Perhaps I may remind the House that the regulations are the next stage of a process of simplifying the supplementary benefit scheme, which was launched by our predecessors as long ago as 1976. The review report entitled "Social Assistance" was published in July 1978 and was the subject of widespread consultation. We inherited that work and carried it forward. The first step was legislation, and that is now in the Social Security Act 1980 which became law in May.
The main change that we are making in this first stage of the reform is to convert discretion into entitlement. Instead of there being a wide measure of discretion exercised by officers of my Department under the guidance of the Supplementary Benefits Commission, there will be legal rules clearly set out in regulations with published guidance to help claimants and their advisers. Claimants will be entitled to a written statement of their benefit.
1065 There will be a new adjudication system, similar to the national insurance scheme, with a final right of appeal to the social security commissioner. I think that it is widely agreed in all parts of the House that this represents a significant improvement.
Not the least of the advantages of such a system is that it will scotch once and for all the widespread myths about the lavishness of supplementary benefit provision. I hope to goodness that we have heard the last of colour television sets—with or without doors—being provided to those receiving supplementary benefits.
§ Mr. Jenkin
They came from all over the country, and neither I nor any of my predecessors was able to trace a case back to its origins.
§ Mr. Jenkin
Colour television sets are not included in the regulations and they will not be provided.
The new structure for which detailed provision is made in these regulations became necessary because without it, as I am sure the right hon. Member for Salford, West recognises, the system was heading for breakdown. There has been a huge growth in the number and amount of exceptional weekly additions to benefit and lump sum grants. Practice has tended to vary quite widely across the country. Staff have found great difficulty in trying to exercise their discretion fairly. As a result, there has been growing conflict between claimants and staff, which has made for difficulties. Perhaps most unsatisfactory of all has been the growth over the years of a mass of secret, unpublished instructions, subject to no parliamentary control or approval but which governed the incomes of up to 5 million people. The change is, therefore, a major step towards open government, a major reinforcement for the rule of law, and a major social reform.
§ Mr. Jenkin
No. Many hon. Members wish to speak, and I am sure that the hon. Gentleman will do his best to catch your eye, Mr. Deputy Speaker.
I do not want to take the House through all the regulations in detail. Overwhelmingly, they do no more than codify existing SBC policy. However, one set of regulations has aroused some interest in the press and in the House and it would be right to say a few words about them. I refer, of course, to the single payments regulations which are intended substantially to codify the existing policy—I stress "policy"—of the SBC relating to exceptional needs payments.
It is under those regulations that claimants will become entitled, as of right, to special help with, for instance, furniture and furnishings, removal expenses and other exceptional needs that arise from time to time. That is the area which has given rise to some of the greatest difficulties in the past and where we expect the most benefit to flow from the new structure in the future.
Contrary to what has been suggested in some quarters—I have had time only to skim through the paper of the Child Poverty Action Group—for many of the items, including, for example, bedding, payments will be given as of right provided that the criteria of the regulations are met.
There is, of course, in addition the fallback provision under regulation 30. Some have seen the terms of that regulation as a deliberate attempt to penalise claimants by making it much more difficult to get special help in the circumstances described. I must make clear that that is not the Government's intention. The fall-back power has to be looked at alongside the rest of the regulations, which, as I have said, provide an entitlement to help in the circumstances set out in the regulations.
Of course, if one is to substitute clear rules for unfettered discretion and at the same time retain a final fall-back discretionary power to catch the wholly exceptional case not covered by the regulations, that long-stop must be carefully circumscribed. Regulation 30 does that by providing that, in addition to the single payments provided for as of right in the rest of the regulations, discretionary payments may be made where serious damage 1067 or serious risk to the health or safety of the claimant or any member of his family may be prevented.
That regulation is a long-stop. It is not intended to be the basis of widespread help. That help will be given either under the normal requirements provisions or under the main special payment regulations, which, as I have said, broadly seek to codify existing policy. For instance, consider clothing grants. The commission's policy in the past has been founded on the principle that claimants should provide for clothing out of the scale rates, except in special cases. Such a special case may be a child who has grown quickly and needs replacement clothing at more frequent intervals, but the general clothing requirement is to be met out of the scale rate.
What has happened in practice has been different. There has been great uneven-ness in the interpretation of the policy and the assessment of hardship in individual cases. The regulations seek to provide for a greater standardisation by codifying the policy and thus providing for what should have been happening over recent years. For instance, we have set out the particular exceptional cases, and the definition excludes normal wear and tear, normal outgrowing, and so on. It is to deal with the special cases, and I think the House will recognise that as sensible and fair.
The supplementary benefit regulations also implement a substantial simplification of the scheme. There will be three rates instead of five rates of benefit for children, with a levelling up of the rates to help families with children in certain age groups. There will be two rates of heating addition instead of three and, as the House knows, the increases in the heating additions are being substantially increased this winter. There will be only two main disregards—£4 for earnings and £4 for other income. There will be a much simpler capital disregard of £2,000. The long-term rates of benefit are being aligned with the national insurance long-term rates. All this represents a significant simplification, which will make for easier administration by the staff and easier understanding by the public.
The opportunity is also being taken to make some substantial improvements. The qualifying period for the long-term 1068 rate will be reduced from two years to one year, greatly helping many lone parents and families whose breadwinners are disabled. We are introducing a tapered disregard on earnings for lone parents which will help those many single parents who wish to go out to work part time; and, as I have said, many families with children will gain from changes in the scale rates for children.
The Government are looking at a number of the other changes recommended in the review report. For instance, the report recommended that there should be a unified housing benefit in place of the very confusing mix of help through supplementary benefit and help from local authorities through rent and rate rebates. We have this under active study at present. If this reform can be achieved, as I hope it will, we might then be able to move on to some of the further simplifications recommended in "Social Assistance" which were dependent on the introduction of a unified housing benefit.
But those changes must be for the future. For the present, the regulations now before the House represent a substantial first step. They have been broadly welcomed by the present members of the Supplementary Benefits Commission and, I believe, by the wider public outside.
§ Mr, Jenkin
The hon. Gentleman should realise that the members of the Commission are wholly independent, having been appointed by our predecessors in every case. Therefore, we can take some support from the fact that they have welcomed broadly what we are doing here.
In place of complexity, there will be simplification. In place of secrecy, there will be published rules. In place of discretion, there will be clear, legal entitlement. These are valuable reforms, and I commend them to the House.
It is not difficult for the House to list improvements in benefits which we should all like to see.
§ Mr. Jenkin
I am drawing my remarks to a close. Perhaps the hon. Member will be patient and seek to catch your eye, 1069 Mr. Deputy Speaker, when he can make his point.
None of us would find it difficult to think of improvements in benefits that we should like to see, and in the course of this debate I am sure that there will be no lack of these from Opposition Members. They will make the point particularly at a time of rising unemployment. However, it is wrong to think that we can just spend our way out of recession and increase employment by cutting taxes and boosting Government spending. I say in all candour that that option no longer exists. To the extent that it ever existed, it worked by injecting inflation into the economy.
The Labour Party recognises that those are not my words but those of the present Leader of the Opposition when he was trying to instruct his party in the realities of life as long ago as September 1976. Those words are as true today as they were when the right hon. Gentleman uttered them. Therefore, the Government put forward these proposals entirely in line with that view of public spending. We shall listen with great interest to Opposition Members. If they tell us that the benefits can be increased, I hope that they will also say how they should be paid for. Without that, their words are but empty rhetoric.
§ Mr. Deputy Speaker (Mr. Bernard Weatherill)
I remind the House that all 11 of the motions on social security may be discussed in this debate.
§ Mr. Stanley Orme (Salford, West)
I can tell the Secretary of State that a Labour Government would not have cut benefits in the manner in which this Government have. We start from that basis. What the Secretary of State has just said about the orders and regulations and about the supplementary benefits review is a travesty of the facts. I shall deal with it in more detail later in my remarks.
The House has agreed to consider these orders and regulations together, and I think that it is in the interests of the House that we debate them throughout a full day rather than in the early hours of the morning, and that we have a chance to cover child benefit, the supplementary benefit regulations and the up-rating order. This is the first time that it has been done on this basis, but I 1070 think that it is the most satisfactory way to proceed.
Obviously, I want to deal with the child benefit uprating regulations, the supplementary benefit regulations and the November uprating of benefits. This debate takes place against a background of rising unemployment and high inflation. Now is the time for the Government to restore the cuts made against the less well-off in our society. They should restore to them essential purchasing power, which will be used by them and will help the economy to expand.
The Secretary of State asked how we would pay for this. He made great play of the surplus in the national insurance fund, but when he quotes figures about previous surpluses I can tell him that benefits were never cut when we had a surplus.
The public find it inexcusable that benefits are being cut when national insurance contributions remain at the same level and there is a massive surplus in the national insurance fund. The irony is that when the Government push more people into supplementary benefit they affect the public sector borrowing requirement, whereas if we can use the national insurance fund the 5 per cent. cut will not reduce the PSBR because the cut will be balanced by national insurance contributions.
The Secretary of State should take on board the fact that we need not be in this position at the moment. No one here is talking about increasing benefits. We are talking about restoring benefits to the position that obtained before the Social Security (No. 1) and (No. 2) Bills.
I turn to the child benefit uprating. This is not really an uprating; it is a downrating. Child benefit has not been increased since April 1979. Between April and November 1979, prices rose by 11 per cent. Assuming another 16½ per cent. increase in prices in the 12½ months to 24 November, the total price increase since April 1979 will have been 29.3 per cent. Therefore, merely to restore the value of child benefit it would have to be increased to £5.20 per child. The rate proposed in these regulations therefore represents a cut of 45p, or nearly 9 per cent., in the real value of child benefit. I am sorry that some Conservative Members who talk a lot 1071 about child benefit are not in the Chamber at the present time to put their point of view. I acknowledge that the hon. Member for Abingdon (Mr. Benyon) is present.
The Government neglect of child benefit is particularly perverse in the light of their often-stated concern about work incentives. The Secretary of State's speech this afternoon amounted to love but no money. We got charity and sympathy but no money and no promise. There was a trailer in the Sunday newspapers yesterday about another possible increase in April next year. We got nothing from the Secretary of State. The Prime Minister stated on 1 May:it is right to have a larger difference between those in work and those out of work".—[Official Report, 1 May 1980; Vol. 983, c. 1616.]It is time that someone pointed out to the Prime Minister that child benefit is the most positive aid to the family and the most effective way of maintaining the work incentive about which she is so concerned. Those could almost be the words of the Secretary of State during his years in opposition, when he advocated the introduction and extension of child benefit.
The Secretary of State glossed over the problem of one-parent families. The child benefit premium for one-parent families was raised from £2 to £2.50 last November and is now going up to £3. At first sight, this appears to be an increase, but what does it mean in terms of total child benefit payable to the lone parent? If there is only one child in the family, the child benefit, including the premium, will rise from £6 to £7.75—barely enough, considering inflation. If there is more than one child, the lone parent will get less in real terms than in April 1979. For a two-child family, the benefit, including the premium, will have risen by 25 per cent., with a 29.3 per cent. increase in prices. For a three-child family, the benefit will have risen by only 23.2 per cent.—a cut of nearly 5 per cent. in real terms.
Millions have suffered and will suffer even more from the effects of Government policy that are not fully reflected in the price index. This is especially true for those just above the poverty line, the group for whom child benefit is most 1072 important. They have lost their school meals. They have lost the daily free pint of milk that families with three young children got until last January. They are especially hard hit by the increase in the price of fuel and other necessities.
One priority that the Government should consider, especially in view of their previous pronouncements, is the immediate restoration of child benefit to its correct purchasing power in November this year. To do anything less is letting down the family within our society.
I wish to turn now to the supplementary benefit regulations. I am not satisfied with the gloss that the Secretary of State put on them. They are complicated and detailed. More have yet to be laid by the Government. On the Government's own admission, the regulations will leave about 2 million claimants worse off than would have been the case under the existing rules. There was no mention of that by the Secretary of State. The number of losers, including wives and children, is probably at least 2½ million. Against that figure, about 500,000 claimants will be better off, according to Government estimates.
The number of losers will, in fact, be much bigger. One reason is that the Government's figures do not include the two-weeks' postponement of uprating. The figures also do not take into account the loss of clothing grants and other special needs payments, so much restricted by these regulations. The Supplementary Benefits Commission made it clear that it was not possible to simplify the scheme without at the same time increasing the benefits to iron out the rough edges. The Government have not done that.
My right hon. Friend the Member for Norwich, North (Mr. Ennals) and I wanted a simplified scheme but knew that we would have to pay for that scheme. We are getting a so-called simplified scheme at the expense of the lowest-paid claimants within society. Against the continued rise in unemployment, and particularly the extension of the number of long-term unemployed—the highest since the 1930s—there is no excuse for not immediately extending the long-term rate of benefit to the unemployed. That would be a positive and civilised approach to the 300,000 long-term unemployed—a figure that, unfortunately, is growing week by week. I 1073 believe that the Government have a duty to take action.
The Government claim that the great virtue of the reformed supplementary benefits scheme is that everyone will have a clear legal right in place of the wide area of discretion that now exists. The regulations do not bear out that claim. Again and again, terms such as "reasonable", "appropriate" and "sufficient" are used. Under the present scheme, where words of this kind are used, the SBC can and does lay down detailed guidelines to ensure that they are interpreted with some degree of consistency. The Government are abolishing the SBC. The responsibility of interpreting the regulations will fall on individual benefit officers. How this will result in clearer rights for claimants is far from clear.
What is clear is that many of the payments that claimants can at present receive will be ruled out under the new regulations. The criteria for payment of clothing grants in regulation 27 of the single payment regulations are particularly restrictive. No one would argue that discretionary clothing grants are the right way to help the sick, the unemployed and the elderly. With the basic benefit rates at their present level it is not surprising that many claimants have to rely on these extra payments when major items of clothing have to be replaced.
§ Mr. Patrick Jenkin
If one goes back 10 years or more, to a time when the real value of ordinary, standard level supplementary benefits was much lower and far fewer special payments were made by way of clothing grants, does the right hon. Gentleman not realise that this pattern of special payments that has grown up over the years—
§ Mr. Jenkin
The right hon. Gentleman was arguing that they needed it. I am saying that when one considers the supplementary benefit provisions of 10 or 15 years ago one sees that these things were paid for out of the normal allowances. One did not have the same amount. The policy of the Supplementary Benefits Commission has been to make these exceptional. They have not been exceptional. That is why the new regulations represent a considerable improvement.
§ Mr. Orme
Even the standards of people in these circumstances should rise and their demands for consideration should be taken into account. In government we were considering that there should be a regular six-monthly payment. This Government are restricting matters and not making the payment. That is where the cut comes. The Secretary of State should take account of the situation. A worrying aspect of the virtual abolition of the clothing grant is the failure to make transitional arrangements for areas where reliance on these grants is the greatest. These areas are found in parts of Scotland—Glasgow and other such areas.
This matter was raised during the Report stage of the No. 1 Bill, when the hon. Member for Wallasey (Mrs. Chalker), in reply to an Opposition amendment, said:The new arrangements for the supplementary benefit scheme could not take effect overnight everywhere. Therefore, we shall be phasing the new arrangements in gradually, not just for the areas that have been mentioned in the debate. The main benefit of the gradual implementation will probably be felt most in areas where there is the greatest difficulty."—[Official Report, 19 March 1980; Vol. 981, c. 537.]On the strength of that assurance—one of the few positive concessions made during the passage of the Bill—the amendment was withdrawn. Yet there is nothing in the regulations about gradual implementation. Many organisations such as Age Concern and the Child Poverty Action Group have said that the biggest losers under the regulations will be the pensioners. I agree.
We are not able to deal with all the regulations in detail. They are going through Parliament at a pace. We do not have much time in which to discuss them, although certain issues must be raised.
Regulation 12 (2) (a), (b) and (c) and regulation 13 (2), (3) and (4) of the Supplementary Benefit (Requirements) Regulations 1980 remove from benefit people who are involved in a trade dispute.
Let us consider the case of a wife who is working, perhaps part-time, and whose husband is sick or unemployed and in receipt of heating allowance. If the wife is involved in a strike but not necessarily on strike herself, the allowance will be stopped. Is that the way to act in a civilised society?
1075 Under the Supplementary Benefit (Single Payments) Regulations 1980, regulation 6 (1) (a), (b) and (c), the same situation arises. Hidden away in the regulations is a vindictiveness against people who are involved in trade disputes. It is reprehensible.
The regulations replace many of the discretionary policies of the Supplementary Benefits Commission. We are told that the A code will be fully available under the regulations. Let us examine the cost. The six sets of regulations published so far are priced at £8. More are to come. Neither the claimants nor the thousands of people in advice centres will be able to afford them. That will be particularly true when the original regulations are added to by a stream of amending regulations. The cost will be excessive. It is not sufficient to tell claimants that they can obtain copies in an office. Such an office may be crowded and busy. Claimants often need assistance. What will the volunteers do when they have to find many pounds for copies of the regulations? I am talking not about administrative guidance vis-à-vis a new A code but about essential guidance for claimants.
When are we to be told about the appointment of the new advisory committee? Rumour has it that the Secretary of State is having difficulty in appointing a chairman.
§ Mr. Patrick Jenkin
I hope to be able to make an announcement about the appointment of a chairman before the House rises at the end of next week.
§ Mr. Orme
That at least is an advance. I thank the Secretary of State for that information.
I turn to the question of the November upratings, which involve benefits for millions of pensioners, the sick, the unemployed, people suffering from industrial injury and people in receipt of invalidity benefit. For many there will be a 5 per cent. cut, at a time of rising unemployment and rising inflation. The cuts are an unfair tax on the poor. There is no guarantee that they will be restored once benefits are brought into tax. The uprating orders cannot be seen in isolation. If they are passed there will be nothing to stop the Government from making similar cuts in 1981–82. That 1076 would represent a loss of about 14 per cent. in addition to the loss of earnings related supplement. The combined effect of the cuts for a man with average earnings who loses his job in January 1982 will be a loss of well over £20 a week. The cuts in invalidity benefit are particularly indefensible. Some of my hon. Friends will want to raise that issue.
The Government have admitted that nearly half the 850,000 invalidity pensioners have incomes below the tax threshold. I have seen the letter that the Prime Minister sent to my right hon. Friend the Member for Manchester, Wythenshawe (Mr. Morris) on the figures relating to invalidity pensioners. I do not know who wrote it, but it is difficult to understand and does not clarify the position. The Secretary of State obviously has had sight of the letter. Perhaps we can return to it later.
Even if the cuts are made good when invalidity benefit is taxed, there is no question of paying arrears. The Secretary of State speaks soft words to the invalidity pensioners. He says that he will probably put the matter right in 1982. What about 1980 and 1981? A single man or woman drawing invalidity benefit for the whole period from November 1980 to April 1983, assuming that proper taxation starts then, will lose about £185—and a married man will lose more.
Even more vicious than the 5 per cent. cuts in the adult benefit rates are the cuts in the children's rates. Taking into account both the national insurance additions for children and the child benefit, the total amount payable for the child of a sick or unemployed man will rise in November from £5.70 to £6. If the inflation rate is 16½ per cent., that means a cut of 65p in real value. That is not a 5 per cent. cut; it is one of 10 per cent. There is no excuse for that. There is not even the excuse that the benefits should be taxed, because Ministers have made it clear that they do not intend to tax the additions for children, just as child benefit itself is not taxed.
The Government are using a loophole in section 17 of the Child Benefit Act which provides that when child benefit is increased the national insurance additions for children may be reducedto such extent as the Secretary of State thinks appropriate".1077 We often talked about equalising the rates. My word, we shall have equalisation this way. The rates will go down, not up.
If there is a shortfall this year, will the Government make it good? I have raised this point before and we have had a long explanation from the Secretary of State, as well as soft words from Lady Young in another place. We now need an authoritative statement from the Secretary of State, and I hope that we will hear it tonight.
Will the Government now put right the injustice—an injustice felt increasingly by millions of people—that was done when they moved the uprating date from 24 November to 10 November? That would restore the two weeks' increased benefit to which claimants are entitled. That a married couple should lose £12.30 over the two weeks is outrageous. Against that background there is the order that implements the Christmas bonus. Despite increasing inflation, that bonus remains at £10 and in no way compensates for the two weeks' benefit lost by millions of claimants. As my hon. Friend the Member for Wood Green (Mr. Race) said, taking away two weeks' benefit and giving people £10 in the following week will be seen as a cynical move by the Government. That is mean in the extreme.
For the reasons that I have stated the Opposition believe that the loss will affect the most needy in our society, who are being penalised in a disastrous manner. I therefore ask my right hon. and hon. Friends to divide on the Supplementary Benefit (Single Payments) Regulations 1980. Our action takes into account other orders and aspects of other regulations to which we are opposed. We shall reflect our opposition to Government cuts across the board in our vote tonight. I urge all my hon. Friends to vote against the regulations and represent the millions of people in this country who deserve our help.
§ 5.1 pm
§ Mr. Paul Dean (Somerset, North)
This Session of Parliament has been a particularly significant one for the social security programme because we now have a Government with the courage to face reality and take difficult decisions. The reality is that expectations in the area of social security have been growing faster 1078 than resources to meet them. Economic growth has not kept pace with the built-in growth factor in the social services. In addition to poor economic performance there has been a substantial growth in the proportion of retired people to the working population. There are growing demands on the social services and, unfortunately, the means to meet those demands are diminishing.
These unpleasant realities had to be faced sooner or later, and I give credit to the Government for facing them now. The right hon. Member for Salford, West (Mr. Orme) made a characteristic and predictable speech containing much extravagent rhetoric. However, it did not contain any twinge of conscience. One would have thought, listening to the right hon. Gentleman, that he and his party bore no responsibility for the state of our economy and that the harsh realities now faced by social services Ministers had nothing to do with him and his record when he was in government. One would not have thought, listening to the right hon. Gentleman, that for more than 11 of the last 15 years Labour Governments had been in office.
There was no recognition in the right hon. Gentleman's speech of the drift and decline in our economic performance while he and his colleagues were responsible for our affairs. His speech would have been much more convincing had it contained a little humility and an acceptance of some of the responsibility for the position in which the country now finds itself.
The other characteristic aspect of the right hon. Gentleman's speech was a total disregard for the realities of the present situation. The social security programme now accounts for more than a quarter of our entire public expenditure. It is the biggest single item of public expenditure. That expenditure has been growing in recent years three times as fast as national output.
§ Mr. Dean
I shall not give way for the moment. I am dealing with the speech of the right hon. Member for Salford. West.
These are the facts that no Government can afford to ignore. We have heard extravagant language on many 1079 occasions, and we have heard it in this debate, about the undermining of the very foundations of the Welfare State. In the light of that language, we should look at the realities. We must look at total figures.
What are we talking about? In these instruments we are talking about a total expenditure of more than £15,000 million for this year and the savings and economies proposed by the Government amount to about £200 million. Extravagant language in the face of those figures seems to me to be wholly unwarranted.
§ Mr. Dean
I shall give way when I have finished this point.
We hear a great deal of regret—and it was touched upon by the right hon. Member for Salford, West—expressed about the reduction in personal taxation. It is said that if that measure had not been implemented it would have been possible to continue with an untouched social security programme. But Opposition Members continually ignore the fact that one of the reasons why the economic performance of this country was so poor when they were in government was the high and increasing levels of personal taxation.
If we are to stand any chance of improving our social security programme for the future it is necessary for us to put the incentive back into wealth production in our nation. It is extremely regrettable that the right hon. Gentleman continues to show a disregard for the economic facts of life.
§ Mr. Ennals
Is the hon. Member suggesting that there is something disgraceful in a steady increase in social security benefits, bearing in mind the fact that people have been living longer and that unemployment is going up dramatically? Or is the hon. Gentleman suggesting that we should not have improved benefits for the disabled? What is the hon. Gentleman saying when he tells us, as we all know, that social security benefits have been going up? Is that not to be expected in a civilised State?
§ Mr. Dean
Under previous Conservative Governments—particularly during the 1950s—we had substantial real growth in our social security programme. That was possible because we had a substantial growth of economic resources to finance that programme. But increasingly, as time went on—particularly during that long period when we had Labour Governments—there was a progressive decline in the production of wealth in our nation. The result is that it has not been possible to meet the growing expectations which, rightly, our people have.
The right hon. Member for Salford, West and his party bear a great share of responsibility for the position in which we now find ourselves. The need for economies was inescapable. Any Government would have failed in their duty had they not made the necessary economies. Furthermore, had the Government failed to act now, the most vulnerable sections of our community would have suffered most.
Against that background, I believe that the Government have got the priorities broadly right. In these circumstances, it must be right to give the highest priority to those on long-term benefits and to those most in need. I welcome the fact that my right hon. Friend has been able to assure the House that, on the best estimate that can now be made, those on long-term and supplementary benefits will have their benefits fully price protected on the basis of the 16½ per cent. increase contained in the regulations. It is entirely right that pensioners, widows, the disabled, single parents and those on supplementary benefits should have the highest priority.
Equally, there is the improved fuel allowance scheme, which will be of considerable benefit to a large number of people who are most in need of this additional assistance. However, if these long-term benefits are to continue being price protected, there clearly must be savings elsewhere, and where else can one look for savings but in short-term benefits, such as sickness and unemployment benefits and the earnings-related supplement? One of the savings that is being made relates to the taxation of these benefits. There has been no dispute on either side of the House for some time about the fact that these benefits should be brought 1081 into the taxation system. The only thing that has been disputed is whether it is administratively possible. I am glad that this problem is now being tackled.
There is another reason why my right hon. Friend is right to look for savings in this area, certainly with regard to sickness benefit. Sick pay schemes on an ever-widening scale are now run by employers. As to unemployment, there are redundancy payments which help to fill the gap there. I am also glad that in making these savings my right hon. Friend has improved the safety net for the sick and the disabled, in that the long-term rate of supplementary benefit will in future start after one year instead of two years.
The surplus on the national insurance fund was mentioned by my right hon. Friend and by the right hon. Member for Salford, West. However, I thought that the right hon. Gentleman made too much of it. The fact is that the surplus, as revealed in the Government Actuary's report, is very small indeed in relation to total expenditure. I think that my right hon. Friend said that it was under 4½ per cent. One must take into account the uncertainties.
The Government Actuary's report, particularly this year, is full of the word "uncertainty". When talking about the surprising downturn in sickness benefit, he says that the reason "is not yet known". He goes on to talk about the graduated pension scheme and states thata special degree of uncertaintyenters into any calculations here. The same applies to the assumptions which the Government instruct the Government Actuary to make. He says that it is exceedingly difficult to assess what the level of employment will be over the next year, and even more difficult to assess the level of earnings. Therefore, one must take the Government Actuary's reports with a great pinch of salt. I say that with no disrespect to the Government Actuary. I say it simply because there are so many subjective factors on which the calculations must be based.
As the Government Actuary has identified this surplus, I hope that that will make it easier for my right hon. Friend and the Government generally to deal with some of the raw edges that have been revealed as a result of the economies that are being made. I refer 1082 first and foremost to the invalidity pension. I hope that it will be possible at a very early stage to bring the invalidity pension back into line with the retirement pension, and when I say "at an early stage" I mean before 1981.
I welcome my right hon. Friend's commitment that, when the disability pension is brought into the tax system, it will be brought back into line with the retirement pension, subject to the availability of resources. We must bear in mind that that will not be until 1982. We must also bear in mind that a significant proportion of those receiving invalidity pension do not pay tax and are unlikely to pay tax in the future. This is a long-term benefit. It should be price protected along with the other long-term benefits. I very much hope that this small surplus on the national insurance fund, according to the Government Actuary's report, will enable the Government to make good the shortfall next year rather than in 1982.
I welcome the child benefit premium for one-parent families as well as the substantial increase in family income supplement. I welcome the fact that the maternity grant will shortly be non-contributory and will be payable to 60,000 mothers who at present do not qualify. These are all important steps forward in small but significant areas. However, yet again, I must express my disappointment that it has not been possible this year to increase child benefit by more than 75p.
There is little doubt that the Child Poverty Action Group and others particularly interested in these matters are right when they say that families with children have lost out this year compared with families without children. I listened carefully to what my right hon. Friend said. He said that it was the Government's intention to uprate child benefit each year and to retain its value. That is welcome as far as it goes, but I hope that the shortfall, which is evident and well documented this year, will also be made up next year at the latest.
I agreed with the points made by the right hon. Member for Salford, West about the importance of child benefit to family support, but that benefit is also significant in dealing with the vicious effects of the poverty trap, the "Why work?" syndrome and other arguments of that kind, which I need not repeat.
1083 because they are well known on both sides of the House.
My final point relates to the reformed supplementary benefit scheme. I welcome, as I am sure does the whole House, the intention of simplifying what has become a highly complex and involved system. I also welcome the clear, legal entitlement. But when I read the regulations I begin to wonder how much simpler the system will be for those who will benefit or are entitled to it and for those who will have to administer it. It is too early to pass judgment, and it is not a good test to pass judgment on the basis of regulations which, under the new arrangements, must be extremely complicated and detailed.
I hope that my right hon. Friend intends to produce a child's guide, an updated version of the supplementary benefit handbook. I see him nodding assent. It will be extremely important, not only for those who will have a new method of support but for those who will have to administer the scheme. I hope that my right hon. Friend, when he replies, will say when the new edition of the handbook will be available. I hope that it will be in good time so that there will be sufficient time to study it and to become familiar with it before the new arrangements come into operation.
I was glad to hear my right hon. Friend refer to the need for a unified housing benefit. There is no better single advance in the jungle of supplementary benefit support for housing, and local authority support through rent and rate rebates, than a unified housing benefit. That would be a great advance. I hope that the Government will give high priority to bringing that about.
As the new arrangements unfold, I hope that the Government will pay a great deal of attention to the fears and misgivings that have been expressed by Age Concern, the Child Poverty Action Group and the Association of Directors of Social Services—to mention only a few—about the effect that they fear the new arrangements may have on single payments and maintenance arrears. That is another area that we need to watch carefully to see how the new arrangements work.
Nobody on either side of the House likes the idea of economies being made 1084 in the social security programme. The Government are right to face the realities, to allocate their priorities and to ensure that the highest priority is given to those in greatest need, namely, those on long-term benefits. I hope that it will not be long before the economy begins to respond to the Government's economic policies.
§ Mr. J. Enoch Powell (Down, South)
I have one specific purpose, and one specific duty, in intervening in the debate, which I shall do briefly. The House has before it no fewer than 11 instruments, seven of which are subject to the affirmative procedure and will take effect as the result of a decision of the House. The other four are subject to the negative procedure, and it is against one of those that, so we have been told, a Division will take place at 10 o'clock.
Surely no hon. Member doubts—and it is certainly in no way the intention of the Government to provide otherwise—that everything in the instruments should apply absolutely uniformly to all parts of the United Kingdom. Whatever may be the differences in standards and costs of living between London and the provinces or between the different parts of the United Kingdom, it is the intention—and everybody knows it—that what is laid down in the 11 instruments shall apply uniformly throughout the country. Nevertheless, the instruments do not apply to my constituents. They do not apply to Northern Ireland at all; and if I or any other hon. Member representing a Northern Ireland constituency, in taking part in the debate, were to seek to strengthen or support our argument by reference to circumstances in our constituencies, you, Mr. Deputy Speaker, would be obliged to rule us out of order as speaking outside the scope of the debate.
Naturally, corresponding regulations, having the force of law in that remaining part of the United Kingdom, will be made in due course; but those corresponding to 1085 the seven instruments subject to affirmative procedure will be subject, so far as they apply to Northern Ireland, only to negative procedure, so that the chance of their being debated will anyhow, in all human probability, be narrow and remote. Furthermore, those corresponding to the four instruments subject to negative procedure here today will not be subject to any parliamentary procedure at all, so that no comment whatever will be possible in this forum, from the point of view of that one part of the United Kingdom.
The simple contentions that I wish to put on the record this afternoon are these. It is unacceptable that the application to different parts of the kingdom of law that is uniform, is intended to be uniform, and in principle ought to be uniform, should be subject to different forms of procedure which afford differing opportunities to hon. Members according to the part of the United Kingdom to which they apply. That is my first contention. My second is that it is absurd for the Parliament of the United Kingdom to make what it knows is United Kingdom law in two separate ways, by first passing Great Britain legislation—all the statutes under which these instruments have been made are Great Britain statutes—and then, secondly, assenting in various ways to Orders in Council and other orders applying to Northern Ireland.
Of course, we understand how we have come to be in that position. The legislature in Northern Ireland having been suspended in 1972 and abolished in 1973, the fiction has since been maintained that one day, and very soon, there will again be a separate—I hardly dare say subordinate—legislature which will concern itself with those matters. I leave on one side the irony that, even when there was such a legislature, one of the principles it never broke was always to legislate pari passu on these matters with whatever was done by this House. Leaving that aside, however, it is unrealistic for the House to continue to act on the assumption that there will presently be established in one part of the United Kingdom a legislature that will take over these tasks.
I am not seeking to introduce a constitutional debate; for even suppose that the apparently obvious was to turn out to be mistaken, there would be no difficulty 1086 whatsoever in a new legislature going on from where the law of the United Kingdom on those matters stood whenever it came into existence.
Meanwhile hon. Membrs who come to the House from one part of the United Kingdom are, in effect, being debarred from representing their constituents on vital and human matters in the same way as all other hon. Members can do so. In putting that on the record, I am appealing to one of the characteristics of the House, namely, its sense of fairness between one Member and another, between one part of the country and another. I believe that more and more hon. Members, and more and more members of the Government and of the alternative Government, are coming to the view that it is intolerable for us to continue very much longer legislating for the United Kingdom, not in the proper manner—by United Kingdom legislation—but in a way that results in the anomalies to which I have drawn attention.
In small matters and in great, the Province where I have the honour to represent a constituency places itself at the disposal of the Parliament of the United Kingdom. It desires to remain, as it is, an integral part of the United Kingdom, and to accept all the implications and consequences of that. But one of the rights which is implicit in that status is to be legislated for in this House, in the same way as the House legislates for any other part of the Kingdom.
This is not a plea that I have made now for the first time. I fear it may not be quite the last time that my hon Friends and I will be heard making it. But this, in a matter which so intimately concerns the life of our constituents, was an opportunity, which it could not be within our duty to fail to take, of placing that plea upon the record.
§ Mr. Tristan Garel-Jones (Watford)
As one who heard the right hon. Member for Down, South (Mr. Powell) make precisely the same point last week at a late hour, I am sure that, if only for the convenience of hon. Members who represent constituencies elsewhere in the United Kingdom, what he said is extremely welcome, apart from the consideration of natural justice to which he referred. I know there is a great deal 1087 of sympathy for his remarks on the Conservative Benches.
My hon. Friend the Member for Somerset, North (Mr. Dean) has already traced the framework in which these discussions are taking place. On one small point, he let the Opposition off lightly. He said that when we and the country hear talk of the dismantling of the social services, it is worth remembering what sums we are talking about, and he estimated that the cost was £15 billion. In fact, it is £19.8 billion, according to the Government expenditure plans—that is more or less £20 billion.
It is hyperbole, therefore, to talk of dismantling the social services. Incidentally, £20 billion is about £1,000 per family in the whole of the United Kingdom. That is worth remembering, as is my hon. Friend's point that expenditure on social services has been rising about three times as fast as output.
Although some decisions that the Government have had to take have been difficult for them and for many of my hon. Friends—and, indeed, for Opposition Members—the message is coming across to the country that we simply cannot spend money where we wish unless we can return to the economic expansion that will enable us to pay for it.
I want to refer only to the orders relating to child benefit and the pensioners' bonus.
I do not want to rehearse the detailed arguments about child benefit, and the disappointment felt by many hon. Members on both sides about the shortfall in child benefit this year. Many of us felt that it should have been uprated by at least £1. The hon. Member for Birkenhead (Mr. Field) and other hon. Members made a strong case for it to go up by as much as £1.20 in the current year. The rise of only 75p has been a great disappointment to many hon. Members, not least because of the Government's commitment to tailor their social policies to helping families, particularly poor families, with children.
I welcome the Secretary of State's categorical statement today that at least from the baseline of £4.75—we shall not let him forget that there is a continuing shortfall—child benefit will continue to rise in line with other benefits. I hope 1088 that I understood my right hon. Friend correctly.
§ Mr. Garel-Jones
I was also here when that point was made. Perhaps I was listening to the debate rather more closely than the hon. Gentleman. My right hon. Friend said that neither the present Government nor the previous Labour Government would ever make such a commitment in advance. All I wish to underline is that we have had a commitment today that from this baseline of £4.75—
§ Mr. Andrew F. Bennett
The hon. Gentleman said that no party would make such a commitment, but does he agree that in other areas we have put it into the legislation? That is a much better commitment than the assurance of Ministers, who tend to come and go.
§ Mr. Garel-Jones
The point to establish clearly is that from a baseline of £4.75—we accept that there is a shortfall, which we shall not let the Government forget—child benefit will be uprated in line with other benefits. Although there may not be a statutory obligation on child benefit, there is on the other benefits to which my right hon. Friend referred.
Many hon. Members will recall—I hope that I shall not have cause to be embarrassed—what the Conservative Party said in opposition about the Christmas bonus. In the run-up to the general election, a Conservative Party press release said that the Christmas bonus, which had been worth £10 in 1973, was worth only £5 by the Christmas of 1978. We put a question mark over what it might be worth in 1984.
§ Mr. Donald Thompson (Sowerby)
It was worth nothing in 1978. I do not think that the Labour Party queried that.
§ Mr. Garel-Jones
My hon. Friend is almost correct. In two years—1975 and 1976 or 1976 and 1977—the previous Labour Government did not pay the Christmas bonus. It is well known that 1089 the Labour Party dislikes the bonus. It has never liked it. I believe that it was for this reason that my right hon. Friend felt that the bonus should be written into legislation.
§ Mr. Garel-Jones
My right hon. Friend has dealt with that point. One of those two weeks is accounted for by what I think is called natural slippage, and would have occurred, for technical reasons, whichever party had been in office. My right hon. Friend made it clear that the other week is accounted for by the need to save money. It is as simple as that. I do not think that the Government or any hon. Member should have to apologise for trying to save Government money in these difficult times, so I do not.
§ Mr. Eric S. Heffer (Liverpool, Walton)
I am amazed at the naivety of the hon. Gentleman. Surely it is obvious to anyone that the reason why payment has not been made for the two weeks—I have never heard of such a thing as a 54-week year—is that the money is used to pay the bonus. That is the whole point of it. That is how the Government get out of it.
§ Mr. Garel-Jones
I am sure that the whole House welcomes the hon. Member for Liverpool, Walton (Mr. Heffer) to the debate and hopes that he will stay.
§ Mr. Garel-Jones
That point has been well covered. One of those weeks was to save money. The other was due to natural slippage on technical points which would have occurred whichever party had been in office.
In opposition we made it clear that the value of the Christmas bonus had slipped from £10 to £5. We printed a list of the items from an old-age pensioner could have bought with his bonus in 1973 and in 1978. I shall not detain the House by reading it out. Suffice it to say that at Christmas 1973 there were 17 items on the list compared with seven at Christmas 1978.
I suggest to my right hon. Friend that if we intend to leave the bonus at £10, it 1090 is probably better to scrap it altogether. It will be almost not worth collecting. At the present level of the retirement pension, many elderly people cannot put money aside to meet extra expenses over Christmas. If the Conservative Party goes into the next election proposing Christmas bonus of £10, Labour Members will hammer us hard.
I am slightly encouraged by a letter from the Under-Secretary of State in which she said:the legislation we have put before Parliament provides that, in future years, the amount of the bonus may be increased having regard to the economic situation, the standard of living and other matters.At least the door is open for the Government to make that increase before the next election.
I end on the same note as my hon. Friend the Member for Somerset, North (Mr. Dean). It is no use the Labour Party weeping crocodile tears. We all wish that we could spend more on the social services to help those in need, but the country, if not the Labour Party, has already realised that we can do so only if we produce the goods, and the wealth, to pay for it.
§ Mr. David Ennals (Norwich, North)
I am glad to follow the hon. Member for Watford (Mr. Garel-Jones) I give him credit for consistently supporting child benefit and, with some of his hon. Friends, leaning on the Government to be more reasonable and generous. His leaning has not had any effect, but I trust that he will go on leaning as the months go by.
I must put the record straight. The hon. Member for Sowerby (Mr. Thompson) arrived, intervened and, with great rapidity, left the Chamber. I assure his absent but ample figure that there were Christmas bonuses in 1977 and 1978.
§ Mr. Ennals
There were two years when there were no Christmas bonuses—1975 and 1976. However, the Christmas bonus was restored in 1977 and 1978.—[HON. MEMBERS: "Why?"] I took the decision as Secretary of State because I thought that it was the right thing to do.
§ Mr. Ennals
No, I shall not give way. I simply recall for the sake of history that there was a Christmas bonus in 1977 and 1978.
§ Mr. Ennals
I shall give way later when there is a serious point. I shall not give way now. Many of my hon. Friends want to make speeches and I want to make my speech.
I disagree with my right hon. Friend the Member for Salford, West (Mr. Orme) on one point. I do not find it satisfactory that we should be discussing 12—some have said 10, others have said 11, but I make it 12—statutory instruments in one debate, because many of them raise issues of fundamental importance. Many have a great deal of detail within them. Therefore, I find it unsatisfactory to have to debate them all at once and then to vote upon them.
In my view, this debate sets the scene for tomorrow's censure debate. The measures in these instruments are so crude, mean and damaging to the whole concept of a humane society that they would form grounds for a censure debate. During the general election we heard many fine words from the Tories about caring for the weakest in our society. Then we had two social security measures, neither of which was hinted at during the election, which knocked the nails in the coffin of the belief that the Tory Party was a caring party. Today is the funeral because we have to vote on the orders and regulations which follow from those two measures.
In what will be a short speech I want to touch briefly on the supplementary benefit and child benefit regulations and then make some comments on the national insurance fund and national insurance benefits.
1092 As Secretary of State I recognised the growing complexity of the supplementary benefit system and set in hand the review that was carried out by officials. I wanted to create a simpler system for claimants and for the staff to administer. I agree with the hon. Member for Somerset, North (Mr. Dean) that the Government have come forward with regulations of frightening complexity. I hope with him that the simplicity will eventually come through in a way which can be understood by both claimants and those who have to administer the system.
Apart from that, there are some startling injustices. Time permits me to give only two or three examples centred on the discretion exercised by Supplementary Benefits Commission officers.
The Secretary of State referred to clothing. The review team recommended that, if discretionary grants were to be cut back, there should be a system of six-monthly grants for clothing and footwear. That meant that there would not be the discretion, but that the money would be available. It was an excellent proposal to ensure adequate clothing and to ease the administrative burden of decision making. But the Government have ruled out that part of the proposals on the ground of cost. I believe that that will hit hardest at young children, particularly the children of the unemployed whose benefits are being cut by other regulations.
§ Mr. Patrick Jenkin
The right hon. Gentleman is confusing two things. One is the codifying of the existing policy which is embodied in these regulations. The other is the more far-reaching, more sweeping reform recommended by the report to replace the existing policy for hardship payments on the ground which it had hitherto operated for long-term beneficiaries with a six-monthly payment on the lines that the right hon. Gentleman described. There are seen either as two alternative approaches or conceivably as successive approaches. If we can get housing and so forth out of the supplementary benefit, it may then be more reasonable to look to the far-reaching reform. In the meantime, no one envisaged these as being one on top of the other. The right hon. Gentleman may be confused. Certainly he is confusing the House.
§ Mr. Ennals
I am grateful for that intervention. As it is, we are getting neither. We are getting neither a special six months grant, nor a higher level of benefit for those on supplementary benefit. The suggestion of simply making long-term benefits applicable only to those who have been on supplementary benefit for one year does not deal with the whole of the problem. However, I am grateful to the right hon. Gentleman for his intervention.
There is another aspect of the reduction of discretionary powers to help out individual cases on which I want to touch—the negative discretion which is written into the regulations. I draw the right hon. Gentleman's attention to Supplementary Benefit (Requirements) Regulations 9 (4). This allows a benefit officer to award a reasonable amount for board and lodging accommodation ofno more than suitable standard".This negative form of wording leaves the benefit officer with enormous discretion to decide how much to award. It allows him to decide not how much more to award but how much less to award. It even allows the officer to pay a charge for accommodation which is of less than suitable standard. If this regulation is approved by the House tonight, because of the Government's ability to get this matter through, I hope that this point will be properly dealt with in the advice that is given to the officers concerned.
§ Mr. Ennals
It is Supplementary Benefit (Requirements) Regulations 9 (4). I am sure that the right hon. Gentleman will find it.
I move on to child benefit. Here we have an absolute failure to carry into effect policies advocated by the Secretary of State and his hapless Ministers when in opposition. For him, these must have been 15 months of depression and misery, as he had to swallow words that he had repeated over the years in the period leading up to the general election. I certainly exclude the Minister of State from this criticism, since I do not recall ever getting any support from him in the battle which was fought to ensure not 1094 only that child benefit was properly established but that it was established at a satisfactory level. Certainly I am not saying that the Minister of State has had to swallow his words. However, the right hon. Gentleman and the hon. Lady the Under-Secretary have certainly had to swallow their words.
The Secretary of State was not even a fair weather friend, but it was always to him that I had to turn for support. There were times when I was glad to see the Secretary of State battle when he was on the Opposition Benches for bringing in child benefit quickly. Then there was none of this phasing in year by year. It was "Bring it in quickly and at a high figure." But those days are past.
§ Mr. Peter Bottomley
I am trying to elicit a helpful point. Clearly Secretaries of State in both Governments have had difficulty in persuading their colleagues to do what on the face of it would be in line with the principles of both major parties—not only to bring in a child benefit or identical child tax credit scheme but to get them raised. Without wanting to break Cabinet confidentiality, may I ask the right hon. Gentleman whether he, as an experienced Secretary of State, will try to explain to the rest of us what it is that acts on a Cabinet that makes them reluctant to do this? I am sure that getting a greater understanding of this matter will help those of us on both sides of the House who are trying to raise the political pressure as well as political understanding so that child benefit can be raised and kept up.
§ Mr. Ennals
I suppose that in about 25 years' time—I have forgotten exactly how long it is—I shall be able to be absolutely frank about it. But let me hazard an indication. There are Chancellors of the Exchequer and they have a responsibility. There are battles which sometimes Secretaries of State for Social Services and their colleagues are able to win. If my right hon. Friend the former Minister for Social Security, were not engaged in an even more important occupation than listening to me, he would agree that there were times when we feared that we would lose, and we won; there were other times when we lost. If the present Secretary of State has won any battles during his period as Secretary of State, I should 1095 like to hear about them. Perhaps the Minister who winds up the debate will list some of the successes that the Secretary of State has had in Cabinet. I simply have not noticed them. A Shadow Secretary of State who has fought his principal battle on child benefit and then becomes the Secretary of State who leaves us with a period of 18 months without any increase, and then does it at a level which leaves child support lower than it has been for years, has proved himself to be a paper tiger. There have been big words but very small actions. The Secretary of State was saying at the time that if only he were at the Department all would be well and he would be able to get these things through. But I am afraid that it did not work.
The Secretary of State tried to keep it up. Even after the election was won, even up to the last Budget, he was talking about the last Budget as a family Budget, saying that there was no question of children falling behind. He must know that that was absolute nonsense. At every income level a two-child family gained less than a childless couple, and that applies especially to poor families. As the right hon. Gentleman knows, the combined effect of the benefit changes and the abolition of the 25 per cent. tax band has been to exacerbate the poverty trap. Some have expressed gratitude that the right hon. Gentleman was showing such candour. In 1977 he said:One is bound to ask what could be more absurd. What can one think of a tax system in which someone who is so poor that he is entitled to draw a means-tested benefit finds himself paying tax to contribute towards the cost of it."—[Official Report, 17 June 1977; Vol. 933, c. 786.]In November the gap between the tax threshold, including child benefit, for a two-child family and the family income supplement eligibility limit will be £23.25 as compared with £17.60 a year earlier and £9.30 in 1978–79.
I give just two other examples. A couple with two children who claimed the means-tested benefits to which they are entitled would now be better off earning £55 a week than they would on £75. A couple with four children would be better off earning £55 than £95. The poverty gap, about which the right hon.
1096 Gentleman made such a big issue when he was in opposition has been made wider as a result of both his actions and the actions of the Chancellor of the Exchequer in the Budget last May.
From these Benches we have expressed once again our anger at the Government's decision to slash the benefit entitlement of the elderly, the sick, the disabled, the unemployed, and those receiving industrial injury benefit, and especially our anger at the 5 per cent. cut below the estimated inflation rate. Whether the estimated inflation rate proves to be right or wrong, the right hon. Gentleman knows that he is hitting at people who would not have been hit by a tax system for which he claims this is a substitute. I say again that I do not think that the recipients know what will happen in November. I think that it will be only in November that they realise just what the Government are up to.
I do not know whether the end figure will prove to be 16½ per cent., but I do know that recipients will have passed through a year in which the inflation rate has stood at more than 20 per cent. for many months, and that they will receive an increase of only 11½ per cent. It has already been said that it is all right for the rich. Of course it is. It is not the rich who will be hit by the regulations.
We now know that the Government's squalid, penny-pinching, "undeserving poor" approach was unnecessary. The Secretary of State spoke about the surplus in the national insurance fund. He told us that the figure for this financial year would be about £687 million more than the Government forecast. That is just a small estimating error. It is only 15 times the amount estimated by the Government Actuary.
I do not wish to be personal, but I have thought less and less of the Secretary of State since he took office. However, I have always given him credit for getting his figures right, as a hardened Treasury Minister. Even that mask has now slipped. He said that it was the Government Actuary, not he, who made the prophecies. However, he took the decision, and that decision was no doubt made with Cabinet approval. He consciously decided to increase the contributions of the working population by 0.25 1097 per cent. That contributed to the inflation rate. He took that decision. He cannot say that the Government Actuary told him to take it. He took it, and that was one of the factors that contributed to inflation. Why did he do it? I hope that the Minister will explain why his boss, the Secretary of State, decided to push up inflation by increasing the national insurance contribution by 0.25 per cent. I asked that question in an intervention. The Secretary of State said quite a bit, but he did not touch on that point.
How can the Secretary of State tell those who have paid the extra national insurance contribution that they have retrospectively lost their right to earnings-related supplement? How could he have had the temerity to increase the level of contributions? People found that their contributions had increased, and then the Secretary of State told them that he would take away their entitlement.
We shall vote on this issue tonight. What conceivable justification can the Secretary of State give to the House, the nation and particularly to those on unemployment benefit, invalidity benefit, sickness benefit, and industrial injury benefit for cutting their benefits by about £206 million in 1980–81? He has raised three times that amount by means of higher national insurance payments. What will he do with the money? How will he spend that surplus? I accept that the previous Labour Government showed a surplus in some years, but that occurred when benefits were increasing; it did not occur when benefits were being cut.
It is not as if the Secretary of State can use his national insurance fund for some other purpose. He cannot use it to pay for the National Health Service, although it would be nice if he could. However, he can use it for national insurance. He has chosen this moment to take away the rights of those who benefit from national insurance. I hope that the Minister will answer some of those questions. Who will reap the benefit of the massive extra sum that the Secretary of State has at his disposal?
§ 6.4 pm
§ Mr. John Wells (Maidstone)
I want to take up only one of the points made by the right hon. Member for Norwich, 1098 North (Mr. Ennals)—namely, his complaint about the complexity of the regulations. I do not normally attend debates on pensions—the regulations are always far too complicated for a simple chap like me, and I am frightened off—but I deal with real people, not Government Actuaries and so on. Those real people are my constituents. Because of the complexity of the regulations and of the present situation, the Department of Health and Social Security has got lamentably behind with its correspondence. When it deals with correspondence, it does so in a cavalier manner.
I wish to raise two specific cases. The first concerns a Mrs. Kilby, who wrote some time ago to the right hon. Member for Norwich, North. I am sorry to say that he—perhaps correctly—did nothing about her letter. She was not his constituent, and it appears that he ignored the letter completely. She then wrote—
§ Mr. Ennals
As she was the hon. Gentleman's constituent, it would have been wrong for me to deal with it.
§ Mr. Wells
It is a convention of the House that right hon. and hon. Members pass letters on to those concerned. [Interruption.] The hon. Member for Birkenhead (Mr. Field) should stop saying things from a sedentary position, and should mind his manners. The hon. Gentleman has no manners, and the sooner he gets some the better. I was discussing his right hon. Friend's normal courteous conduct. I am sure that he did not send the letter to me, because I did not get it. However, I do not wish to waste time on this subject.
§ Mr. Ennals
Since the hon. Gentleman has taken my name in vain, I must point out that it is a tradition of the House that hon. Members do not deal with the problems of constituents of other hon. Members. Hundreds of people have 1099 written to me since I ceased to be Secretary of State, and I follow two practices. Sometimes I send a letter directly to the hon. Member concerned. Sometimes I send a letter to the Department. [Interruption.] I may have sent Mrs. Kilby's letter to the Department, but I never sit on any correspondence.
§ Mr. Speaker
Order. I do not know whether this is a private row or whether I may be allowed to join in. Hon. Members should allow the hon. Member for Maidstone (Mr. Wells) to continue.
§ Mr. Wells
Mrs. Kilby then wrote to the present Leader of the Opposition. Unlike his right hon. Friend, he sent me her letter. In due course I sent it on to my hon. Friend the Under-Secretary of State. I drew my hon. Friend's attention to the urgency of the matter and received the usual acknowledgment. I said that the matter was urgent as it might have already been in the hands of the right hon. Member for Norwich, North and that it was definitely in the hands of the Leader of the Opposition. I wanted to see some action fairly smartly, because there had been a considerable delay.
We are about to begin the Summer Recess, but I have still not received a proper reply. That is disgraceful, because Mrs. Kilby's case raises fundamental matters of principle. She is a widowed lady on an invalidity pension and on supplementary benefit. Because of financial need, she has taken in a lodger. The gentleman is getting a divorce, and the weight of the cohabitation rule has swung into action. It is important for the Department to ensure that local officers have an exact definition of cohabitation.
I pay great tribute to my local office, which is staffed by superb people doing a difficult job in difficult circumstances. I am not knocking them in any way. However, they refer difficult cases to some great grandee somewhere in the Department, and I hope that my right hon. Friend will administer a bit of a kick to this grandee, whoever he may be.
My second case concerns a lady whom I shall call Mrs. C, for reasons which will become obvious. At the age of 15 or 1100 16, Mrs. C was unfortunate enough—this occurred many years ago—to produce an illegitimate baby. Society being what it was then, Mrs. C was unfortunate enough to be committed to a mental institution—because she had produced an illegitimate baby, and for no other reason. She has never been in need of mental treatment and has never had any. She has now lived her entire life in mental institutions. For more than half a century she has been used as slave labour by the Department of Health and Social Security and its predecessors which ran mental institutions. She is now of pensionable age, but she received no pension because she never stamped a card.
My hon. Friend the Under-Secretary had the impertinence to write to me saying that Mrs. C had worked in the laundry, which was thought to be therapeutic. I have never heard such rubbish in my life. I took this case up many months ago. The illegitimate daughter concerned, now a lady in late middle age, lives in Hornsey, the constituency of my hon. Friend the Minister of State, Northern Ireland Office. Both he and I have written to the Department and pressed the urgency of this matter. All we have had is one curt, absurd answer and some brushing off by the Secretary of State, when nobbled in the Lobby. I do not expect Ministers to know all about the Mrs. Cs of this world, but the fact remains that this poor lady has no home, no rights, no pension, nothing. She has been put upon by the system for more than half a century.
I believe that she should be paid a pension as of right. The only way it can be paid, I understand, since she has never stamped a card, is through the discretionary powers that we are discussing tonight. I hope that my right hon. Friend will look at this second specific case with speed and sympathy, and I hope that there will be no further brush-offs.
§ Mr. Lewis Carter-Jones (Eccles)
I hope that the hon. Member for Maidstone (Mr. Wells) gets a satisfactory reply to the important issues that he has raised.
The House will not be surprised to hear that I wish to raise the problem of the maternity allowance, in view of the long fight that I have had to improve perinatal care in this country. My hon. Friend the Member for Wolverhampton, North-East 1101 (Mrs. Short) and right hon. and hon. Gentlemen on both sides who served on the Select Committee will realise that one of our major recommendations to prevent perinatal death and handicap was to raise the level of the maternity allowance. I shall not go into the question of the £687 million, and whether it is fictitious, an arithmetical error, or whatever. The figure that we are now discussing is £25 million, which would dramatically alter the perinatal death and handicap scene in this country.
Tonight we are dealing with a statutory instrument which effectively cuts the maternity allowance by 5 per cent. when what is needed is a substantial increase. I will not bait the Secretary of State, because he and I shared a platform in the campaign run by the Spastics Society called "Save the Baby". The need has been clearly identified and a method of saving babies has been shown, yet the statutory instrument that will be passed tonight does something that is opposite to what is required. I urge the Secretary of State to consider regulations, or legislation to reverse this position.
In case some hon. Member claims that we do not have time for that, I must point out that some of us have been in the House long enough to know that we have had First and Second Readings, Committee stage, Report stage and Third Reading in this House and the same in another place all in the space of 25 hours.
The Select Committee has clearly identified a need and obviously a small sum of money would right this wrong. That money would be recovered very quickly. I do not believe that 90p a week for a pregnant woman is what is required to balance the Budget. I just do not believe it.
The second point arising from the statutory instrument is the question of notional resources. Here, Big Brother is really rearing his ugly head. If one is a pensioner on supplementary benefit and one wants to cut the hedge belonging to the man next door, and one knows that that man can afford to have his hedge cut himself, one must not cut it. One must not be a good neighbour. The notional resources regulation says that this is something that one must not do. I quote:Where a person performs an unpaid service for another person who has the means 1102 to pay for that service and for which in the ordinary course he would pay, the amount calculated by reference to comparable employment and the means of the other person may be treated as if it were actually paid.I never thought that I would see a Government dedicated to voluntary effort producing regulations of this kind. It is an absolute disgrace. We have also been told that once the legislation has gone through, matters will be clarified and cleared up in order that people may understand what is happening.
§ Mr. Patrick Jenkin
The rule is exactly the same as that which the Supplementary Benefits Commission has operated under Governments for many years. There is no difference at all. One must have a regulation of this sort to stop people being treated incorrectly. The operative word in that regulation is "may". The supplementary benefit officer may make an application of resources in the circumstances that would be appropriate. To say that that regulation strikes at voluntarism is absurd. The hon. Member must not try the patience of the House in this way.
§ Mr. Carter-Jones
I accept only partly that stricture from the right hon. Gentleman. The regulation is evil and wicked, no matter who enacts it. I maintain that point. If my Government were wrong they must take the blame too. It would not be the first time I had stuck out my neck and opposed my Government. The regulation was wrong then and it is wrong now. The regulation has been rewritten and there are implications behind it. My next point will be to give an illustration of how the Government have muddied the waters. Here the waters have been cleared. It is crystal clear to any DHSS manager that he has an obligation to check both ways—on the giver of the service and on the recipient. It is a "1984" situation.
The regulations have been redrawn to clarify that situation. However, let us consider two categories of people who could benefit from allowances—a mother visiting a child who has been sick for a long time and needs assistance with her fares to the hospital, and the frail, elderly husband or wife who visits a sick spouse. The regulations have been redrawn in a supposed attempt to clarify the way in 1103 which such people can claim a contribution to the expenses.
"Person A, who regularly visits another person, B, who is a patient in any hospital or similar institution where—
and so on. That is supposed to make it possible for the frail and elderly to realise what their rights are when visiting someone in hospital. It is topsy-turvy language. The position is clarified to enable those with a Big Brother mentality to punish people giving a service, but the position of people who may be entitled to receive a benefit is made more confused.
- (a) A and B are not members of the same assessment unit but—
- (i) were members of the same household prior to the hospitalisation of B; or
- (ii) are close relatives;
- (b) either—
- (i) A and B are partners, or
- (ii) R is a dependant of a relevant person who is either B or B's partner, and B has been a patient for a continuous period of not more than eight weeks",
The position over special needs payments has been made abundantly clear. Those in special need will receive one item of clothing. In the old days a supplementary benefits officer could consider exceptional need and issue vouchers or equipment accordingly. I have visited a National Health Service hospital for treatment for my feet. Notices are plastered all over the wall in the foot clinic enjoining people to make sure that their children have shoes that fit, because that is essential for their future well-being. If children do not have properly fitting shoes they may be lame for life. However, what if people are receiving supplementary benefit and their children need new shoes? Payments cannot be made to replace clothing or shoes worn out or outgrown in the normal way.
I beg both Ministers to reconsider those four unpleasant points.
§ Mr. Peter Bottomley (Woolwich, West)
The increase in pension for a single pensioner is £3.85, which is more than five times the increase in child allowance. That figure takes no account of the opportunities that people have to provide for their old age. We do not need to be reminded that children are forbidden to work.
1104 Families who have children have a responsibility to look after them. However, we should consider how that burden can be distributed over a family's life cycle and shared throughout the community. I have previously explained how I see family finance transfer operating in a family's life cycle, rather than there being a transfer of money from the responsible child free to the irresponsible people who have children to provide for the future generation, who, one hopes, will be pushing us around in our wheelchairs.
It can be argued that inflationary increases in the cost of dependants should be met by the family and that it is the responsibility of parents to earn more to provide for their children, even in times of high inflation. Over the past 10, or even 15, years the trade unions have negotiated higher and higher pay awards and the lower paid families who cannot support their children become even worse off. They suffer more than those who do not have dependants. It can be argued that we are all capable of making arrangements for our old age and not relying on the State.
It can also be argued that child benefit should meet only one third of the cost of bringing up a child. Over the past 25 years child support has dropped by 30 per cent. in real terms, while the retirement pension and average earnings have increased by over 100 per cent. If one takes an index number in 1955 for pensions and child support as 100, child benefit is now 70 and retirement pension 210. In relative terms the old-age pension is three times the child benefit. That is the central fact.
It is difficult to consider the matter in the context of this instrument, and I therefore intervened during the discussion on the business motion to plead for consideration of the place of child benefit and the economic repercussions that are associated with increasing it to a realistic level. The House should consider the matter at length and in detail.
I regret that the right hon. Member for Norwich, North (Mr. Ennals) is not present. He was not able to share with the House a non-attributable briefing on the problems in the Cabinet room! It is clear that child benefit needs to be increased now and for the future. I welcome what my right hon. Friend said 1105 about the Government's intention to make sure that child benefit keeps up with inflation. We too often forget the battles fought in the Cabinet and in Committee and with the Treasury, when pursuing an interest of special interest. The Blue Book—the White Paper—states specifically that it is assuming no further increase as a working assumption on the estimates of the cost of child benefit. That is not necessarily a demonstration of the Government's intention. However, it demonstrates that at the time of the Budget there was no automatic suggestion from the Treasury that child benefit would be increased in 1981. The Government have gone two steps further.
§ Mr. Patrick Jenkin
I could have added that the fact that the Government have made the commitment that I gave this afternoon means that in future the amount will appear under the child benefit heading in the expenditure projections, and how far we are able to match that or fall short of it depends upon the economic situation.
§ Mr. Bottomley
I am grateful to my right hon. Friend. I hope that both the tone and the mode of my remarks demonstrate how glad I am that he and his colleagues have felt able to go as far as they have.
I am worried about the fact that neither the House nor the country understands the pressures or the alternatives. Under the previous Government we had the fiasco of high alumina cement in Washington, which, we understand, was a cover-up for a Treasury battle over the expense of child benefit, and that was followed by the Government saying" We would like to bring in child benefits for the first child early, but the lads of the Labour movement will not accept it".
The hon. Member for Islington, South and Finsbury (Mr. Cunningham), with the help of the right hon. Member for Sal-ford, West (Mr. Orme) and the then Conservative Opposition, managed to bring people together to achieve a phased introduction. It would not have been possible without strong action on the Government side to press the Administration to go further than they were willing to go when they were putting forward excuses.
We need to see whether those who quietly or secretly argue against increases 1106 in child benefit are right. They must have arguments to support their case, but it is difficult to flush them out. At the same time, it is important that those who argue for a substantial increase in child benefit should be prepared to say what they are willing to give up.
If we are discussing transfers over a life cycle, I can point to three major examples of wasted tax allowances. In parentheses, although I understand the arguments for increasing child benefit, with other social security benefits, in November, it would be better if we managed to pull them into the April tax changes. I understand that there are administrative difficulties in doing that, and when the date of payment was moved to November the pass was almost sold.
We need to look for benefits for people when they need them, as broad a tax base as possible and relatively low marginal rates of tax for the broad mass of the community. Those are three good principles.
Let us consider the tax relief gained on housing by someone in my position. Let us suppose that I have a £7,000 mortgage on a £12,000 house and I change jobs two or three times, or the House ambushes the Government two or three times on Members' pay, or perhaps I become a Cabinet Minister—though I suspect that I shall have to wait longer than most for that—and I manage to reach an income that would justify a £25,000 mortgage. My tax relief would not only be three times higher, because of the size of the mortgage, but I would get relief at the higher rates of tax. Let us remember that one of the reasons for getting rid of the child tax allowances was to stop the rich getting greater benefits to help them support their children.
As we extend home ownership, we should try to achieve a housing finance system that costs less and is addressed more adequately to those who need help at the time they need it and we should consider whether it would not be better to distribute more resources for people's responsibilities to their children than for expensive houses.
With a higher proportion of wives and children being in families where both parents are at work, the additional tax allowance for a working wife, whether she works or not, is misdirected. It might have been appropriate 70 years ago when 1107 few mothers were at work, but nowadays a higher proportion are at work, even when their children are young, and it would be better for us to refocus the narrowing of the tax base—by, I hope, using a tax credit or benefit system—to provide a home responsibility allowance, available to those who have to care for dependants at home and who are giving up the benefit of an additional income in the household.
The third allowance that I should like to consider is the general tax allowance. I have never seen the virtue of having a substantial personal tax allowance that remains the same whatever the level of income. I wish to refer to the tax credit proposals put forward eight or nine years ago—
§ Mr. Bottomley
By the Liberals or by the liberals in the Conservative Party, one of whom—my hon. Friend the Member for Kensington (Sir B. Rhys Williams)—is in the Chamber.
We need to look at wasted tax allowances in all the personal allowances. I have been forward in airing views that would probably have me thrown out of a Conservative Cabinet, but I believe that it is the responsibility of those in my position to argue where the money for an increase in child benefit should come from. I delight in the increase in the old-age pension to well over twice the level of 25 years ago. The same considerations apply to the support for children.
We should be able to expect much more of parents if we made sure that the upbringing of their children was more independent of the economic circumstances of their families. If we are trying to invest in future generations that are likely to do more, and to do it better, than we have done, we need to ensure that those who are responsible for their care can look after them adequately.
Unless we can get it across to the Government that there are many on both sides of the House who are willing to look at the issues, such as the cost of increasing child benefit substantially over a period of years, we shall not be able to move forward. We must persuade the Government to explain to us what they see as the drawbacks of an increase in the benefit and to join us in examining 1108 what areas of public expenditure or reductions in the tax base might be sacrificed in order to achieve a higher increase in the benefit.
Two or three days before the Budget, The Times kindly published an article in which I tried to put forward a benign, incomes-policy model of the economy. I also tried to focus on the resulting savings to the public sector borrowing requirement, which is a floating and rather small margin between large totals of public spending and public income, similar to the perceived surplus in the national insurance fund.
We have a choice between carrying on as we are, with pay settlements at a high level of between 10 per cent. and 25 per cent., and getting the general level of pay settlements over the next two or three years down to between nil and 5 per cent. or between 3 and 10 per cent.
If we are to achieve such a reduction, most of us will be worse off in the next year or so. In those circumstances, those who cannot look after themselves—the elderly, the sick and children—will need protection. We have managed to price-protect the State retirement pension, though we have not managed similarly to protect pensioners' savings. We have managed to continue spending on the NHS the levels laid down by the previous Government. That is a welcome achievement. However, we have failed to do enough to look after dependants and children.
If we are to reduce the general level of settlements, we have to protect those looking after children from the ravages of price increases and recognise that there will be massive savings to the Government in bringing down the rate of inflation. If the achievement of the Government's target of reducing the rate of inflation requires help from most working people, in agreeing to pay settlements which, on the face of it, make them worse off than an increase in line with the current rate of inflation, how are we to enlist their help?
One of the ways in which we can do it is to say that child benefit will go up not at the rate of inflation, which is what the Government have indicated they hope to achieve, but by, say, 15 per cent. during the first year that the level of inflation is lower than 10 per cent. If the Treasury 1109 works out on its computer model of the economy what are the net savings to public expenditure of getting a level of inflation lower than 10 per cent. one year early—a minor suggestion of a small acceleration in the reduction of inflation—it will find that the cost is substantially lower than the additional 5 per cent. increase in child benefit. The advantage is that the 13 million parents of our children, probably two-thirds of whom are at work, will be arguing that it is in their own interests during the time that they are looking after their children to bring down the rate of inflation.
It seems to me that we need to take a comprehensive look at the significance of child benefit, we need to bring into the open the arguments about its level, and we need to be willing to make other sacrifices to ensure that those already making sacrifices to bring up their children do not have to suffer more than the rest of us in years to come.
§ Mr. Clement Freud (Isle of Ely)
I am grateful to the Chair for calling me immediately after the very reasonable speech of the hon. Member for Woolwich, West (Mr. Bottomley) whose argument on child benefit my right hon. Friends and I have always supported and whose consistency on child benefit we have long admired. The same admiration cannot be extended to the Secretary of State. We admired the right hon. Gentleman when he was in opposition, but much of that admiration has been dissipated.
Last Saturday I was at Littleport Show where there was a stand where certain dignitaries took turns to put their heads through a hole and, for 25p, members of the public were allowed to throw wet sponges at them. The Secretary of State has sat through this debate without even the benefit of the 25p and without raising any money for charity, such as was raised at the fete last Saturday.
However, one could not help noticing that the right hon. Gentleman was extremely quick on his feet when hon. Members made points of which he disapproved—nor that he sat very still when a remarkably villainous case was brought to his attention. The strength of a debate such as this, however orderly it may be to raise such matters when we are discussing statutory instruments, is that it 1110 permits hon. Members like the Member for Maidstone (Mr. Wells) to raise a scandalous case that came to his attention in his constituency. We should all have greatly admired the Secretary of State or his Minister if there had been an instant promise to look into the case. They were not slow in saying that they would intervene in cases of which they disapproved—but their silence in this instance was absolute.
The one uplifting outcome for hon. Members in all parts of the House was that those who felt that there was little egalitarianism on the Government Benches will at least have noticed that the hon. Member for Maidstone and the hon. Member for Hornsey (Mr. Rossi)—now Under-Secretary of State for Ireland—like us do not receive answers when they write letters to the Department of Health and Social Security. It is good to know that there is nothing against us and that it is simply tardiness on the part of an overburdened Department. Perhaps it is only fair to say that the sympathy of us all is extended to a Department that has so much work by virtue of all that is thrown at it.
There are a substantial number of issues that we are discussing in this debate. In order to save time, I shall go through them fairly quickly. We began with the Secretary of State talking about the Government Actuary. It is too simplistic to say from the Opposition Benches that the Government Actuary has got it wrong again because he said that the figure would be 35 whereas now it is 657. But it is only fair to say that the Government Actuary is no better and no worse than his brief. It is essential for the information given to the Government Actuary to be correct in order for him to get out the right figures at the other end.
What was talked about was the 2½ per cent. surplus for employers' contributions. I warn the Secretary of State, in case he is not aware of it, that the figures that the Government Actuary is working on currently were his Government's unemployment figures. They were for 1.6 million unemployed, to which were to be added 175,000 school leavers. It is only right that the House should bear in mind that, in view of the disparity between the information that was given in all faith to the Government Actuary and the figures that are announced from month 1111 to month and that show that unemployment is very much more serious than had been expected and had been fed to the Government Actuary, he will get it wrong again and it will be wrong in the other direction.
§ Mr. Patrick Jenkin
The 1.6 million figure is the average for the whole year. Therefore, it is not necessarily right to look at the figures in the last few months of the year; it is the average for the whole year, However, it is clear that the figure that may ultimately emerge will be higher than that.
§ Mr. Freud
I am grateful to the Secretary of State. I may well quote that back at him, if he is still in his present office. It is the average figure, and the right hon. Gentleman's intervention would have had great substance if he had thought that the unemployment figure was on the way down. He knows, as we all do, that it is on the way up, and figures that go up can only start below. Here, for once, the Secretary of State is right. But the figure is going up, and the average will be very much more than the figure given to the Government Actuary.
§ Mr. Freud
It is enough when in opposition to say that the Government have got it wrong.
No one has welcomed sufficiently the proposals for family income supplement. The increase proposed is good, right and should be welcomed. However, when it comes to child benefit, I share the concern that has been expressed by hon. Members in all parts of the House. What is more, I feel a certain chagrin at the fact that when this House is asked to vote on whether Members' salaries should be index linked a majority of hon. Members vote in favour but that when it comes to child benefit being finked to some specific sum or to the current value of the pound a sufficient majority cannot be found to support it.
The proposal in respect of the Social Security (Benefit) (Married Women and Widows Special Provisions) Amendment Regulations is acceptable. I am concerned about the single payments. I am also concerned quite specifically about 1112 the difficulty that all people will have in understanding the language.
Any hon. Member who has tried to draft a Private Member's Bill will know that what at first appears a very simple issue has to be made extremely complicated. For example,A person to whom paragraph applies is a person who … is aged 19".That seems to be a very simple statement. But it does not stop there. The words arewho is aged 19, but less than 20".This is not easy to explain. The sheer verbiage in every paragraph where it is necessary to qualify and quantify for this to remain within the law is essential when drafting any measure of this kind.
At the same time as a paper of this sort is published, the Department should distribute a guide for ordinary human beings. And it must not be distributed in the form of this pathetic piece of paper that one is asked to believe costs 75p, and the next £2.
As the House knows, I tried to get open government when I was fortunate enough to emerge in a high position for Private Member's Bills. Open government must not only let both sides know what are the rules but must allow both sides to have the rules either for nothing or for so small a sum that it will not be a hardship. I notice that there is no provision in the single payment regulations for the purchase of the rules whereby one knows whether or not one gets the payment. It would not have been a bad idea to allow DHSS supplementary benefit inspectors to have used their discretion if someone had said "I believe what you are doing is wrong. May I have £2 to buy this leaflet to find out whether I am entitled to the benefit?"
I, like, I think, most of my hon. Friends on the Liberal Benches, feel that there is something undignified about a Christmas bonus. Even a child taking a CSE in Father Christmas knows that if one gave a certain amount of talcum powder last year one gives a bit more this year. If there is to be a Christmas bonus, the spirit of Christmas, as well as the facts of the bonus, should be borne in mind. If the Government cannot afford a bonus, that is all well and good.
The Government, at least in some shape or form, have been honest enough 1113 to say that this freak 54-week year, whereby pensioners are failing to get two weeks of the rise they expected, is occasioned by penury. We know what penury is like. If, however, there is to be a bonus, it should be a reasonable bonus and should take account of what was paid the previous year. I wonder whether enough thinking is given to the bonus. It costs money. Like so many presents, it is looked at askance and people say "Is that all we are getting?"
Has the Secretary of State considered that old-age pensioners and the State might be better served by allowing pensioners one return rail pass in the close season when the railways are not doing especially well? A friend or relative would be able to use the pass to visit a pensioner or the pensioner could use it for a return journey to visit someone he had not seen for some time.
§ Mr. Andrew Bowden (Brighton, Kemp-town)
The hon. Gentleman's suggestion seems, on the face of it, to be reasonable, but does he, on reflection, agree that it would act unfairly on a significant number of very elderly pensioners who were unable to travel, particularly when linked with those elderly pensioners who have no friends or family? There are, I regret to say, a significant number of those pensioners.
§ Mr. Freud
That is a valid point. I do not think that perfect government exists. The strength of my contention, which I hope the Secretary of State will examine, is that the bonus in real terms would cost the country less money and would appear to be more generous than a fixed sum. I believe that the vast majority of people would enjoy the opportunity of giving someone the chance to visit them from a far distance. If, as the hon. Gentleman suggests, a person is alone, some small pecuniary value might be attached to the rail ticket. My point was not to give the blueprint for a new form of Christmas bonus. I simply wondered, with British Rail doing as badly as it is, and the Department of Health and Social Security doing as disastrously as we know it is, whether these two losers might get together to afford the nation some winning combination that people would accept.
Most hon. Members have spoken of the "justice" of giving to the rich and 1114 explaining to the poor why they should make sacrifices. I do not believe that any remarks made in the House, in Committee, back here, and no doubt in Committee again, when the Social Security (No. 3) Bill comes before us, will ever allow any of us to justify the enormous disparity between the tax handouts that were made to the rich and the pathetic contribution in overall terms, but realistic enough to them, by which the poor were asked to contribute towards the excesses of the right hon. Lady.
Finally, I welcome the open government nature of the instrument. I welcome also the fact that the mystery of the A code will no longer be with us. I congratulate the Secretary of State on allowing people, albeit for money, or by getting hon. Members or someone knowledgeable to investigate, to know what are the rules. For that small act, the Secretary of State has my approval.
§ Mr. Tom Benyon (Abingdon)
I thought at the beginning of this debate that I would be listening to the speeches with a sense of déjà vu—like watching the action replay of the Olympic events. However, one would not of course dream of admitting that one was watching the Olympics. It was with gratification that one heard in the debate some notable contributions, including that of my hon. Friend the Member for Woolwich, West (Mr. Bottomley) and the barbed humour of the hon. Member for Isle of Ely (Mr. Freud).
The hon. Member for Isle of Ely and his party are lucky that they never taste the bitter realities of power, which would temper the best modulated and thought-out proposals for paying benefits to those least fortunate in our society. Their motto might possibly be "It is better to travel than to arrive". The arrival in power and the realities must be extremely difficult to contend with. It is with sincere sympathy—if I may say so without patronage—that I view what must have been some extremely difficult battles in which my right hon. Friend the Secretary of State has been engaged with his Treasury colleagues in a period extending back just over a year.
Hon. Members heard much rhetoric from the Opposition about how badly my right hon. Friend has done. I do not 1115 think so. We have not been party to the battles that have taken place. It could be the case—I have reason to suspect that it is so—that he has done remarkably well in the circumstances. It must be difficult to be in charge of one of the largest spending Departments of State at a time of world recession with a Government and leader dedicated, whether the Opposition like it or not, to squeeze inflation out of the system in an economy with no growth. The Government are trying hard to put right 20 years of economic mismanagement by both parties, but our party must not fall into the easy trap whereby those in our society at the bottom of the pit, who complain the least, suffer the most, and those who cannot campaign, or find it difficult to campaign and lobby, get a raw deal.
In a speech that I shall try to keep within prescribed limits I should like to touch on child benefit, the problems of the disabled, and the much vaunted Christmas bonus. The child benefit issue has been well ventilated in the debate, particularly by my hon. Friend the Member for Woolwich, West. I regard the Government's record in that respect with sadness. Some of my hon. Friends, some other members of the Conservative Party, and some Opposition Members apparently believe that child benefit is some type of soup kitchen or begging bowl. Emphatically, that is not so.
Child benefit was taken out of the tax system by the Labour Government and given in cash to mothers so that they could have some direct help for their children. If it had been left in the tax system it would have been uprated along with other benefits. Taking it out of the tax system and paying it direct to mothers was one of the most constructive moves made by the previous Labour Administration. However, people forget the facts and intentions. Memories become dulled. Before one knows where one is people make statements such as "It is not up to the State to look after children; it is up to the parents." One of my constituents told me "People should not have children unless they can afford them." He said that he disagreed with the recent increase even though the sum is only 60 per cent. of what it should be. Such people believe that child benefit is a type of soup kitchen. It is 1116 certainly not. It is only equitable to up-rate it, along with other allowances. It is a tax cut for the poor, by which the State can recognise the importance of the family. It should be uprated by £1.20 as soon as possible.
The problem is that when Governments do not face up to an obligation to pay the full amount of child benefit it is harder next time to catch up. There are many instances, not least the pay of Members of Parliament. Unless the Government face the problems the boomerang zooms back at an equally inconvenient moment for the economy, and the Government cannot do their duty. We must face our obligations. It serves the nation ill not to face the problems. The Government should take the thistle by the hand. I was not party to the battles and arguments round the Cabinet table but I believe that even at Cabinet level the nature of child benefit is misunderstood.
I welcome the increase in family income supplement, as I welcome any benefit increases at this difficult time. However, the Government have said that families have done as well as anybody because an 18¾ per cent. increase in child benefit over 19 months is equivalent to an 11 per cent. increase in the personal tax allowance. They say that families are better off than they would have been under the old system of family allowances and child tax allowances. On a close analysis, I do not believe that such arguments stand scrutiny. At every income level a two-child family gained less from the Budget than a childless couple—and the situation is worse at the bottom of the scale.
Child benefit premium is drawn by only 4 per cent. of working families. Lone parents with more than one child, who represent half of all lone parents, gain more from obtaining the value of child benefit than from a 50p increase in child benefit premium. Nevertheless, we must not look at a gift horse in the mouth. We welcome any uprating at this time.
I turn to the ubiquitous Christmas bonus, which comes bouncing back to all Governments whether they like it or not. I agree with the hon. Member for Isle of Ely that the idea of a bonus is patronising. It is unsatisfactory. The Christmas bonus has become a political hot potato which both sides of the House 1117 must face and about which we must speak frankly. It is as unseemly for us to abuse a Labour Government for not paying the £10 bonus as it is for them to abuse us for not increasing it. We would all be pleased if the problem faded away. The bonus was an interim and not-to-be-repeated measure, introduced by the Heath Government in 1972. It has now become part of political folklore. Now it is impossible for either party to do away with it.
It is no use trying to persuade British Rail to help to do away with the bonus, as was suggested by the hon. Member for Isle of Ely. It has now become so popular that it is impossible to abolish it. I should like the bonus to be built into the system as a right. A Christmas present from the Government is not the most satisfactory way of dealing with the problem. The bonus should be a right and it should be increased at the same time as pension entitlements. If it is left out of the system the bonus will be the victim of any Government. It will be treated like the death and maternity grants, which are totally ignored.
Next year the Government should consider extending the Christmas bonus to disabled people. There is no reason why they should be left out of the general Christmas bonhomie. At the risk of being misunderstood by pensioners in my constituency, I must say that I am fully in favour of pensioners receiving all the benefits possible. However, I think that the bonus should be built into the system. That would be to pensioners' benefit.
The whole House is anxious about the plight of the disabled. The most recent debate on the subject was on 12 June. A total of 1¼ million disabled people, many of them children, have done badly under our Government in the last 15 months. They have been asked to share an unfair burden in terms of the economic problems that face our society. They are in a bad way. I do not know how many disabled people are unemployed, because the statistics are not available to me. I suspect that a substantial proportion of the 1¼ million disabled people are unemployed and that they find that job opportunities are remote. The cuts from which they suffer are much vaunted.
In my constituency the regional health authority has cut speech therapy facilities 1118 for mentally handicapped children. That is a tremendous blow for parents and children. Without speech, without the ability to communicate in however rudimentary a way, the development of the mentally handicapped is limited radically. Special teaching for mentally handicapped children has been limited and will be limited further as the service is cut to the bone.
The disabled are suffering from many other cuts in services throughout the country. The problems in my constituency are not unique. The local authority is doing all that it can to maintain services. Nevertheless, telephone services are being examined with a view to cuts, and house building programmes for the disabled are being cut back. The disabled suffered from the uprating of VAT on 18 June last year because invalidity benefit was increased only on 12 November. They suffered a financial disadvantage then.
Married couples are £2.10 worse off on the highest rates of invalidity benefit in the last six months. They are worse off in actual terms and they cannot see, at this moment, any light at the end of their peculiarly and particularly bleak tunnel.
We accept that currently there is no cash for Health Service expansion, but I would have hoped that the Government would consider overhauling the entire system of payments to the disabled. We must do that, and I earnestly press my right hon. and hon. Friends to that course. We must first find out precisely what the disabled want. More than anything else, they want not to be patronised. They wish for the chance to live as normal a life as is possible with their specific disabilities.
The present system of payments is uniquely complex. I believe that it is a total mess. The cost of purchasing copies of the Social Security Act and the six sets of regulations is £11. Not only is the legislation immensely obscure; it is horrifically expensive to buy for those who are interested in how it works. That means that not only is the legislation complex but most people on limited incomes cannot find out what it proposes, even if they can find their way throug its complexity. It would be useful in my hon. Friend could produce cheap editions of the Act for distribution to social security offices throughout the country. If they could not be 1119 given away, copies should be purchased cheaply.
In a comprehensive study by The Economist intelligence unit, entitled "Whose Benefit?" our current payments to the disabled were called aragbag of provisions based on a variety of principles some of them relating to a bygone social order.We must look at the whole system of financial benefits, or the lack of them, for the disabled. The system should be restructured to enable us to give a disability allowance that would grant independence to the disabled. I know that the hon. Member for Eccles (Mr. Carter-Jones), were he in the Chamber, would agree with that, as I understand that he is vice-chairman of the all-party group for the disabled.
The cost of disablement should be studied by the research group. Those costs are high and rising. The cost of leisure for the disabled is higher than for those who have normal mobility of limbs. The cost of clothing, housing, nursing and medical assistance, dietary needs and recreational facilities are higher for the disabled. We should seek to achieve a state where the disabled can live at ease with independence and without patronage in our society.
I know that it is not possible to achieve those things now, because our economy is in such a shaky state, but by the time the report has been produced, the work done and the facts assimilated, we can hope that the economy will be in a state that will enable it to fund such a scheme. We cannot go on ignoring the problems as we do at the moment.
It has been said that a report would raise the expectations of the disabled and that it would thus be unfair even to introduce one, because we would not be able to implement it. However, in our election manifesto we said that we would produce a report. We also said as much in "The Right Approach". The disabled are not stupid. They know the financial constraints under which we are currently suffering. Such a report would give us knowledge of the extent of the problem that we face in dealing with the disabled.
Without knowledge there can be no plan, and without planning we shall get 1120 absolutely nowhere. No one deserves planning, and the benefits that would come from the implementation of planning, more than the disabled people in our society.
§ Miss Jo Richardson (Barking)
Almost everyone who has spoken in the debate has referred to the complexities of the legislation, not least the hon. Member for Abingdon (Mr. Benyon).
Like other hon. Members, I was a member of both Standing Committees on the Social Security Bills, and I recall innumerable speeches from Conservative Members about the necessity of simplifying the system. The whole basis of the first Bill was the pretence of simplifying the system, thus making it easier to understand. Though I agree with much of what was said by the hon. Member for Isle of Ely (Mr. Freud)—I am sorry he is not present at the moment—about the necessity for open government and getting rid of the A code, I wonder whether the Bill will get rid of that code. It may be that we shall need, in the interests of trying to understand the legislation, some guidance in order to interpret it.
We were, as I recall, after much pressure during the debate on the first Bill, promised the regulations by the end of May. The regulations did not appear. When one looks at the regulations, one can understand why they have arrived late. I find it difficult to understand how the Department of Health and Social Security has managed to cobble together regulations of such complexity even by the middle of July, let alone by May.
However, I think that it would have been much more honest if the Ministers concerned in Standing Committee had said, there and then, that presenting the regulations would be extremely difficult since they were not sure how they would come out. It has probably been a costly exercise in terms of departmental man or woman hours to produce the regulations. They have been devised in such a way as to make them, in some cases, almost gobbledegook.
I have read the regulations with great care, and I think that if I understand one-fifth of them I am lucky because they are drawn up in an extremely complicated style. Claimants, people who need a 1121 heating addition, pensioners, or one-parent families will find it hard to pick their way through the regulations.
I was surprised, for example, in the Supplementary Benefit (Single Payments) Regulations 1980 to find continual reference—I had not read the interpretation at the time—to the phrase "assessment unit". I wondered what an assessment unit was. I had visions of a place where one went to be assessed. That was until I read the citation, which says:'Assessment unit' means the claimant and any partner and dependant of the claimant;I find it strange that, suddenly, a claimant and his or her partner or dependant—a phrase which might have been repeated anyway—is turned into an "assessment unit". I take objection to that. It is a patronising, cynical and bureaucratic way of dealing with people. Further it is stated:Claimant' has the meaning assigned to it in regulation 4 of these regulations;If one is a claimant, with or without a partner or dependant, how can one find out whether one is an assessment unit or a claimant under regulation 4? This system will cause endless trouble not only to the people who need to benefit under the provisions but also for the staff of the Department at local level who have to interpret the regulations.
We all know how easy it is for mistakes to occur under the present system. One such case came to my notice only the other week. An elderly lady whose husband had died had not got her widow's benefit from the correct date. I got in touch with the local manager, who speedily found that a file had been mislaid, and the matter was put right. Errors can occur, and, if pressure is put on the staff, they can be corrected.
However, that applies to the present system. How will the Department at local level manage with these new and horrendously complex regulations? Will the local staff participate in training courses or will they simply leaf through the regulations and draw their own interpretations? We have a right to know how such matters will be handled, because in many cases it is we as Members of Parliament, with constituents who are affected, who will be asked whether mistakes have occurred. We need to know how the staff will handle these matters.
1122 Reference has already beeen made to the supplementary benefit handbook. I think that I saw the Minister for Social Security nod his head when he was asked whether there would be an updating of the supplementary benefit handbook. I am pleased to hear it, and I hope that the hon. Gentleman will confirm that in his speech. I hope that he will tell us and, therefore, the rest of the country, when the new handbook will be available. It will be no good if these regulations, which will come into operation in a matter of weeks, are followed by months of delay. We shall all be in trouble then. Therefore, it is essential that the new handbook comes out as quickly as possible.
Will there be an ample supply of fairly simple, explanatory leaflets? Many hon. Members have referred to the cost of these regulations. No one in his wildest dreams can imagine that an ordinary claimant—say, a one-parent family such as a woman with a couple of children who goes out to work—will sweat her way to Her Majesty's Stationery Office and buy the regulations to discover her rights. She will want to be able to go into the local office and quickly and easily find out what her rights will be, as so much publicity has been given to the fact that the Social Security Act will simplify things for her.
I have heard that a leaflet is already out. There may be more than one. That has occurred even before we in Parliament have said "Yea" or "Nay" to these regulations. I was told that the claimant who saw the leaflet nearly fainted when she saw some of the constraints that will be put on what she will be able to claim.
I should like to refer to two points. Most hon. Members have tried to pick out one or two points rather than range over the whole gamut. I shall refrain from commenting in detail on the slippage of pensions, but I find it difficult to understand how a week can slip in this way. Presumably, if there is a particular date and it gets towards Friday, one can carry it over to the Monday. But the best and fairest thing to do is to make the operative date go backwards rather than forwards so that people gain a few pence rather than lose a few pence.
I have received a lot of letters from constituents who are pensioners, particularly in the last few weeks since the 1123 news has begun to filter through, asking how this can be. Believe me, they will not understand that this is just a normal slippage. They will ask" What the hell is this? What kind of slippage is it that does me out of £12.30?".
§ Mr. William Hamilton (Fife, Central)
I am not sure whether my hon. Friend served on the Committee which dealt with this matter. However, the Under-Secretary of State herself said that it was a deliberate act of policy to save £125 million. I think that that was the figure she mentioned. Therefore, the Government have been very open on that matter.
§ Miss Richardson
I am grateful to my hon. Friend for reminding me of that. It was the hon. Member for Watford (Mr. Garel-Jones) who talked about slippage. He also said, quite honestly—and the Government have admitted it—that the other week was intended to save money.
§ Mr. Freeson
Perhaps my hon. Friend, who was on the Committee, will recall that that was never an argument that was put by Ministers. The argument was always that they wanted to avoid this gradual slippage of the date. They never admitted openly that it was their intention to cut public expenditure by this means.
§ Miss Richardson
As I recall, it was in regard to the Social Security (No. 2) Act that Ministers admitted that this was designed to save public expenditure. My right hon. Friend is right to say that the slippage argument was used in relation to the first Bill, but the whole truth came out on the second Bill. My pensioner constituents are none too happy about bearing the extra brunt of losing two weeks—whether one is due to slippage and the other due to costs—at a time when inflation is at present running at just over 20 per cent. Who knows whether it will be down to 16½ per cent. by November? Those people were looking forward to a reasonable increase, but they have been hit in two ways.
That was not one of the two principal points that I wanted to make. I wanted to ask the Minister about the non-contributory invalidity pension, and especially about housewives' non-contributory invalidity pension, which is not mentioned in the regulations. The National Insurance 1124 Advisory Committee reported to the Secretary of State on or about 8 June, and the Secretary of State published NIAC's report about a week ago. I am surprised that the Government did not take the plunge and try to do something about HNCIP in these regulations, because there would have been time for them to do so.
I shall not go into the NIAC report in detail because it would not be appropriate to do so, but it seems to me that NIAC is hedging its bets in both directions. For example, with the changing mood and attitude both on the part of women and towards women today, it sees a case for moving towards the abolition of the household duties test. I should have thought that there might have been a move on the part of the Government to acknowledge what NIAC was doing, particularly as the Secretary of State, when Shadow spokesman, was agitated at the Labour Government's handling of this question of married women and their non-contributory pensions. The Secretary of State called it "close to sharp practice". Therefore, I should have thought that he would have grasped with both hands any possibility of putting the matter right. Here he has a set of regulations with which to do it.
My second main point relates to the exceptional needs payment. I shall not go over the whole range of people who will be disadvantaged by the rigidity with which the regulations have been laid down. However, perhaps the right hon. Gentleman will say where the question of battered women falls within the regulations. Two of the regulations could cover people who are in that situation. Paragraph 27 of the Supplementary Benefit (Single Payments) Regulations refers to clothing and footwear. It states:A payment for any item of clothing or footwear specified in column 1 of Schedule 2 shall be made where any member of the assessment unit"—that is, the claimant and the dependant—needs new or replacement clothing and—(a) that need has arisen otherwise than by normal wear and tear, for example where the need has arisen because of—",and it goes on to listpregnancy … heavy wear and tear on clothing or footwear … the accidental loss of, damage to or destruction of an essential item of clothing or footwear … physical or mental illness or disability1125 necessitating the purchase of special clothing. Nowhere does it say what happens when a woman who has been beaten by her husband—and it is now fairly common practice—leaves home with her children, perhaps in the middle of the night, with nothing other than that in which she and her children stand up.
Such a woman goes to the nearest refuge and, under the present position, the welfare worker will take her to a social security office on the following day. Such offices have been generous in recognising the circumstances, realising that a woman cannot return home to collect her clothing because of the risk of further violence. The office gives her the exceptional needs payment to enable her to buy a change of clothing for herself and for her children. If she subsequently decides—and it is not always the case—that she wants to remain away from her husband, is eventually divorced from him, and sets up home, she does not necessarily have a claim on her clothing and the odd pieces of furniture and possessions that she left in the matrimonial home. Until now, that position has been coped with by the social security system. There is not a large number of people involved, but it is a factor that should be taken into account.
I have received letters from the National Women's Aid Federation and other refuges that know of my interest in the problem. They said that, because of the rigidity with which the regulations have been laid down, battered women—or even battered men if there are any—will find themselves in enormous difficulty where they were not in difficulty previously. I should be grateful if the Minister would make special reference to that point when he replies.
There is a get-out because the insurance officer has discretion. But that is not a good enough answer. In respect of clothing and furniture, the regulation states:Where a claimant is entitled to a pension or allowance and he—a single payment to meet that exceptional need shall be made in his case if, in the opinion 1126 of a benefit officer, such a payment is the only means by which serious damage or serious risk to the health or safety of any member of the assessment unit may be prevented."
- (a) claims a single payment for an exceptional need under any of the regulations in Parts II to VII, but fails to satisfy the conditions for that payment; or
- (b) claims to have an exceptional need for which no provision for a single payment is made in any regulation in those Parts,
We are talking about only half of an assessment unit in this case. I do not know whether a benefit officer would consider that a woman who had left home because she had been subjected to domestic violence would come in either category.
§ Mr. Race
On the question of the benefit officer having discretion to allow an exceptional needs payment, is it not clear from the regulation that the words "the only means" give an opportunity for a benefit officer to refuse an exceptional needs payment on the ground that he believes that somebody else should be doing that job, for example, the local social services department? Is that not a recipe for bureaucratic passing of the buck between the DHSS local offices, the social services offices and many other offices?
§ Miss Richardson
My hon. Friend is right, and I am grateful to him for pointing that out. Not only is it a recipe for passing the buck but, in the case that I am citing and about which I am especially concerned—although I am also concerned about other groups—the benefit officer may consider that the woman should be looked after by her husband. He would lean on her morally and mentally to return to her husband because he might think that the responsibility lay with him. We need to avoid that position, and that is why I raised the matter.
I was glad to hear that the Secretary of State will announce the name of the chairman of the new social security advisory committee before the House rises for the Summer Recess. I wish to underline what I said in Committee—and I think that I received some slight hint of an assurance from the Minister—that we must have some women members serving on the committee. The more that I consider the regulations, the more I realise how much they will concern many women claimants. It is important to have a female element of understanding—that is in no way knocking the male element of understanding—on that committee. I hope that we shall receive an assurance either later today, or when the Secretary of State makes his announcement, that he 1127 will do the job properly and appoint several women to the committee.
§ Mr. Andrew Bowden (Brighton, Kemp-town)
I am sure that the hon. Member for Barking (Miss Richardson) will understand that I cannot answer some of her detailed questions about the new regulations, but I shall refer later to at least some of the topics that she raised.
I was somewhat dismayed by the Chancellor's announcement in the Budget that there would be only a 16½ per cent. increase in the old-age pension in November. I was not convinced by his argument that that would be the year-on-year rate of inflation. According to my right hon. Friend the Secretary of State for Social Services this afternoon, there now appears to be a real chance—although, again, I am not wholly convinced—that the level of inflation will be about that figure in November, I hope that he is right, but what if he is wrong? The Government are under a moral obligation to act as promptly as possible to make up any shortfall in November, especially in the light of the Government's decision in the first Social Security Act 1980 to change the basis on which the pension is increased.
As the House knows, I strongly opposed that Act and voted against it on Second Reading. Its principal provision was that pensions should be increased only in line with inflation, and not take into account wages and other incomes. Previously, the pensioner could obtain the benefit of the better of the two scales of decision. If the pensioner faces a shortfall it is right—indeed, it is a moral obligation—that the Government should act before November 1981. I hope that that will not arise, but, if it does, the Government must find other methods to make up that shortfall early in 1981. That could be done with a spring bonus.
My hon. Friend the Member for Watford (Mr. Garel-Jones) was open and frank with the House when he said that the Government's reason for fixing the payment date at 24 November this year was to save money. I feel deeply that this is not the way to save money. It is a real injustice to pensioners.
I know that the Government will not change their minds at this late stage, 1128 but I appeal to my right hon. Friend the Minister for Social Security to use all his influence with his colleagues to ensure that the increase in 1981 is not handled in the same way. I hope that he will be able to give the House tonight a clear and specific undertaking that the 1981 increase will start on 24 November 1981 and not in the first week of December.
In each of the last 15 to 20 years, financial pressures have built up on pensioners. Inflation has crucified the purchasing power of their savings. Many pensioners—particularly those on the borderline, and those receiving the basic State pension and a supplementary pension—have suffered badly in that period.
There is a great deal of bitterness among many millions of pensioners who saved all their lives, who were thrifty and hard-working. Many gave up holidays and other luxuries to ensure that when they retired they would have sufficient savings and capital to make them independent not only of their families but of the State over and above their entitlement to the State retirement pension. They have suffered out of all proportion.
§ Mr. Matthew Parris (Derbyshire, West)
My hon. Friend implies that the average pensioner today is worse off than the average pensioner 15 or 20 years ago. Is that what he believes?
§ Mr. Bowden
With great respect to my hon. Friend, I do not think that he has quite followed my argument. There is no question but that the State retirement pension now has much more purchasing power than it had 25 or 30 years ago—and, my goodness, so it should. Surely that it is what progress is all about—that each generation, we hope, will not only leave higher standards for its children but treat its retired people more generously.
The group of people to whom I was referring are those who built up savings over many years, who put something away week by week, month by month, year by year, perhaps during their entire working lives, and who saved enough to buy bungalows in Saltdean, Woodingdean or many other parts of the country. They knew that they would have the State pension as well, with its increasing purchasing power year by year, but, instead of having any real margin, they found that their rates went up and up and their fares 1129 increased year by year; they ended up on a narrow margin, with little or no room to manoeuvre.
Some pensioners in my constituency are trapped in areas away from the centre of Brighton. They find it difficult not only to pay their rates but also to pay the bus fares into central Brighton. These pensioners planned their budgets on an inflation rate of probably 5 or 6 per cent. for the last 15 or 20 years of their working lives, whereas, for many of the years in which they have been retired, the inflation rate has been 20 or 25 per cent. When the Labour Party was in power, it reached the record rate of about 27½ per cent.
As a result, the savings of these people have been steadily whittled away. But they are not quite entitled to a supplementary pension because they have just a few pounds a week extra. That means that they are not entitled to many of the other benefits available to those on supplementary pensions. Many of them are worse off than those on supplementary pensions.
The pensioners in that group had a particularly hard time in the last 10 to 15 years, and they are bitter about it. They feel—sometimes wrongly—that those who have not bothered to save, who have not been thrifty, and who did not put something away, have had things easy, that, having spent everything they earned and frittered away their money, they now live on the backs of the rest of the community. That is not an entirely solid or sustainable argument, but it is understandable that these pensioners feel bitter.
Our 9 million pensioners comprise two groups—younger pensioners and elderly pensioners. Whatever the mistakes of the last 10 or 15 years, the blame falls on Governments, employers, trade unions and everyone in full-time employment. None of them can claim to be blameless. The one group of people who can honestly say that they are blameless must be the elderly pensioners, yet they are being asked to make significant sacrifices.
I argue for this group as strongly as I can. I have the honour of being joint chairman, with the hon. Member for St. Pancras, North (Mr. Stallard) of the all-party group for pensioners. Our views are affected by those of other hon. Members in the group. There is a strong feeling 1130 that elderly pensioners have not been given the support they should have considering their lack of responsibility for our present problems.
Additional help can be and has been given. There are concessions for pensioners. In principle, I heartily dislike special concessions. We have to fight hard to get concessions for today's pensioners which will give them some immediate extra help. Unfortunately, there has been considerable bitterness as a result of the various anomalies. The travel concessions are riddled with anomalies. In some parts of the country, pensioners receive generous concessions. In other areas, a pensioner living on one side of the street may receive considerable help while his dearest friend living on the other side of the street gets absolutely nothing. Such anomalies should be looked at and levelled out.
If concessions enabled pensioners to pay a special rate for television licences, there would be tremendous opportunities for abuse and many anomalies. It would be wrong for a pensioner who has been taken into the family home to be able to buy a specially cheap television licence which could then be used for the benefit of the rest of the family, in which there might be two or three wage earners.
§ Mr. Andrew F. Bennett
Does not the hon. Gentleman agree that what upsets pensioners most is that there are already two rates of television licence fees for many people? Those who live in sheltered accommodation or old people's homes pay reduced rates. In fairness, would not the best thing be to give all pensioners the concessions of a free television licence?
§ Mr. Bowden
I should favour the total abolition of the television licence. It seems pointless having the bureacracy and cost of collecting the television licence fee when about 95 per cent. of people have access to television. There should be a simpler and easier way of doing it.
We must move more rapidly towards providing a living pension for all retired people so that they can exercise their right of choice. Whatever concessions we consider, some people will be unable to make use of it. I want them to have the money in their pockets so that they 1131 can decide how to spend it in the same way as we have the right to decide how to decide how to spend our own disposable income without too much interference from the State.
We should accept that we have failed to meet our obligations to the nation's pensioners. We must resolve that in future the retired are not denied their fair share of our national resources.
§ Mr. Andrew F. Bennett (Stockport, North)
This has been a remarkable debate, in that so far hardly any speaker from the Government side has commended either the regulations or the Government's strategy. It is sad that, having so many speeches by Conservative Members critical of the Government, the Government have taken so little notice of them over the past few months. We have heard many eloquent pleas by Conservative Members for increases in child benefit and other improvements in benefits, but the Government seem to brush them aside.
One would have thought that the debate on these 11 instruments would be a good opportunity for the Government to examine and present their strategy for dealing with the unemployed, the weak, the sick, the disabled, the handicapped, the young and the old and for the Minister to set out the Government's aims and perhaps to promise a bit for the future, yet we did not get that kind of speech from the right hon. Gentleman. It was a continual thread of excuses explaining why this and that could not be done. There was very little hope in it. I assume that the right hon. Gentleman was reluctant to make any promises in case he had to come back to the House with a social security Bill in the autumn to make further cuts. It seemed disappointing. Possibly it was because he wanted to continue to put forward the idea outside that the Government are blaming claimants for the country's problems and want them to make all the sacrifices to get the economy right.
Last Thursday the Prime Minister said at the Dispatch Box that it was the fault of the unemployed that they were unemployed, because they would not move. That is the attitude portrayed by the 1132 Government, whatever their Back Benchers may say. It is sad that we have had little or nothing from the Government regarding their ideal for making the regulations a little better as time goes on. It is bad enough for people to be unemployed and to go round week after week searching and pleading for work, but to have drummed into them that they are at fault and are to blame is appalling. Yet that is what the Government have done, and that is what the Prime Minister said. It is hard for people to be unemployed for a long period, to be on long-term unemployment rates, to see their children going short and not to be able to replace essential household equipment; but to be told that it is their fault, that they are to make the sacrifices when they know that many others are getting tax cuts, is appalling.
Again, it is hard for pensioners to find that for the rest of their lives they will have to live on supplementary benefit. There is no escape for pensioners. They have no chance of getting jobs or of increasing their earnings. They are stuck on supplementary benefit for the rest of their lives. They ask why, in the closing years of their lives, they should be asked to make the sacrifice when Ministers and others with similar incomes are making little or no sacrifice. Why should they suffer from the burden of putting the economy right? They find that appalling. They find the Government's policies and attitude harsh and critical of them.
My right hon. Friend the Member for Salford, West (Mr. Orme) made it clear that the uprating order was really a down-rating order. It is a decrease, a sleight of hand, order. We should ask: what would have happened if the rules had been the same as they were last year? First, the increase would have come after 52 weeks, not 54 weeks. The benefits would have gone up this year in line with earnings or prices, whichever had gone up the most. It is clear that this autumn earnings will have gone up the most. Therefore, if last year's rules had been applied, the benefits would have gone up this autumn in line with earnings. Whatever we may say about the inflation rate for prices, over 54 weeks earnings are almost certain to have gone up by 18 or 19 per cent. The Government are cheating people in receipt of benefits out of an increase of 3 or 4 per cent.
1133 The Secretary of State tried hard to justify the contention that the inflation rate for prices would be down to 16½ per cent., but can he say that over 54 weeks it will be down to 16½ per cent.? I doubt it. If he has confidence in his own argument, he should be able to give the House a categoric assurance that, if he has got it wrong, he will make good the shortfall. But he wants it both ways. He wants to claim that he has got it right, but he will not give an assurance about the shortfall. That is unfortunate.
We had many arguments in Committee about this matter. In my view, the increases in fuel costs this year will put an extra burden on people on low incomes—far more than is reflected in the average increase in prices. Again, that has not been taken into account. The uprating this autumn means that those in receipt of benefits will slip behind average earnings, and they will almost certainly slip behind prices as well.
In Committee the Minister claimed that the regulations were concerned with child support. We have seen what has happened to child benefit—a measly 75p. In Stockport, comparing what was paid out last autumn with what is to be paid out this autumn, those in work will find that school meals have gone up by 15p per meal, which means that the 75p is swallowed up in the increased charge for school meals. They will not see any benefits.
I think that most people accept that over the years they have had to take child benefit and the school meals charge as a rounded figure, rather than as separate figures. Taking account of school meals, the extra costs in the provision of books and the loss of other benefits that were provided through the school, the amount of support for the child at school has greatly diminished during the past 12 months.
If one looks at the problems of the children of the unemployed or the sick and the way in which their uprating has been fiddled, one sees that they get an increase from £5.70 to £6—an effective cut in real terms of 65p. The essential needs payments have a major effect on families with children. That again is another area of cuts. In these instruments the Government are disguising major cuts in the amount of support for children.
1134 Many of my hon. Friends have pressed to know who will be on the Social Security Advisory Committee. We had a promise from the Minister that he would announce before the recess the name of the chairman. I hope that he will announce before the recess the names of the full committee. I hope, too, that we shall, as my hon. Friend the Member for Barking (Miss Richardson) suggested, get a good cross-section of people on it, and people who will take a keen interest in these regulations right from the word "go".
A number of us in the House today have received many briefs from various outside organisations. The Minister asked for page references for the brief from the CPAG. I hope that the Minister who winds up the debate will give us an assurance that all the points raised in those briefs will receive a full reply. We cannot possibly go through them all in the House this evening, but there is nothing to stop the Minister from writing to those organisations or publishing in Hansard his reply to all the detailed points that they have put down.
I also hope that the Select Committee that is following the Department's activities will very soon undertake an inquiry into the whole question of the regulations, and will take evidence from all those interested groups and from the Department, so that we can put the regulations under far better scrutiny than can be done in a debate such as this, in which it seems that the regulations lend themselves to question and answer as to what has gone on in them. I hope that we shall get assurances from the Select Committee that it will look at the problem and that we shall get encouragement from the Government that the problems will be examined.
The major change that was proposed in the supplementary benefits was to get rid of the casual payments and to include them in the general rate, but all the arguments put forward for doing that suggested that a little more money had to be available. Unfortunately, of course, the Government chose to change the regulations, supposedly to simplify them, at nil cost. That means that some people may be levelled up, but an awful lot of people will be levelled down. We know that there will be 2 million claimants who will be worse off.
1135 Then there is the whole question of the long-term unemployed. One of the major problems of the increase in unemployment is the number of people who are on benefit year after year. It seems appalling that one can never escape from the short-term rate, if one is unemployed, on to the long-term rates. In any package that the Government are thinking about for the unemployed, they must find a way of getting the long-term unemployed on to the long-term supplementary benefit rates. I know that they have brought down the qualifying period for other people, but they ought to do that now for the unemployed. They cannot claim that the unemployed who have been out of work for 12 months or more have a good opportunity at present of getting jobs.
Many of my hon. Friends have referred to the cost of the regulations—£8 for the set—and the whole question of when the supplementary benefits handbook will come out. I hope that the Minister will assure us that that handbook will be published by the end of August at the very latest, because it is of most value to those who have to give advice, and it is important that they have it in time to look at it before the new regulations come into operation.
§ Mr. A. W. Stallard (St. Pancras, North)
This is an important point. The regulations cost £8. I think that my hon. Friend will accept that one would need a copy of the Acts if one was to understand the regulations. One would pay, therefore, £11 for a set of the regulations and the Acts. Surely we must demand that a guidance book or an appendix to the supplementary benefits handbook in the form of notes of guidance is issued before the November upratings as well as the upratings themselves.
§ Mr. Bennett
I hope that the handbook will be available as a guide, and that leaflets will be available. I should have thought that one of the essential things was to make sure that in every benefit office there was a copy of the Act, a complete set of the regulations, and a copy of the handbook, for people to consult as of right and which people can ask to see. There are major problems of cost and availability. There should be a small library of reference books for any claimant to consult. The Minister will be surprised 1136 to know that there are many staff in the offices who would also like the opportunity to see the original regulations, rather than some interpretation that is handed down to them.
I deal next with the way in which the essential needs payments for clothing are to be dealt with. In Committee we were told that this benefit would be phased out but that in those areas in which people had been accustomed to getting the benefits they would, at least for an interim period, be able to continue to get them. I believe that the Government ought to have accepted the advice that was given to them, and instead of getting rid of these payments for clothing they should have regularised them into a lump sum, which would be paid out every six months. That would have been one of the best ways of dealing with the matter. If the Government are not to do that, I hope that the Minister will tell us how those regulations will be phased in.
Several hon. Members have raised the question of people's capital and the way in which it will be treated. I am particularly concerned about this matter, since I have in my constituency several instances of families having broken up, where the wife has had to draw benefit, but at some point a house has been sold and that has realised a certain amount of capital. I know of several instances in which a wife has wanted to keep her capital so that when she can return to work—very often when the children have reached school age—she has some hope of buying a house with a mortgage. As I understand it, however, if she has capital of more than £2,000 from the sale of a house, she will not be eligible for benefit after an initial six-months period.
The Minister ought to tell us clearly how someone in those circumstances can get round this problem, because it seems reasonable that someone ought to be able to keep that money in order to set towards buying a house, just as if such people were living in their own houses they would be able to keep the capital tied up in them.
The other question is what will happen to maintenance payments that come in arrears. This is a major issue. Several of the documents that I have received as briefing have raised the question of how arrears of maintenance will be treated.
1137 I hope that the Minister will give us some more information.
One of the few things of which the Secretary of State was proud was the fact that he was saying that it will all now be in the regulations for everyone to see. He would not give way to me, but I wanted to press him to make it clear that we shall not get a new A code, and that he will make it clear that the public are entitled to see not just the regulations and the Acts, and that side of it. but all the administrative documents and that they will not be shrouded in some secrecy. It is at this point that the Minister must say "Those are public documents and people can demand to see them". Although in most instances they will not be relevant and people will not need to see them, there should be no continuing secret A code on the part of the Government.
Another matter on which I should like to press the Minister is on what will happen about the costs of child day care. Under the new regulations, will the Government be prepared to meet the reasonable expenses of a child going to a preschool playgroup, or of someone minding children, particularly for single parents? The earnings rule has been eased a little, but that rule very much depends on the cost of child minding. I should like a little more information on how those things will interrelate.
Will the Minister also give a little more thought to the whole question of heating costs? They are clearly one of the areas in which inflation has hit people hardest this year. I hope that the Minister will make it clear to people whose costs are particularly high for one reason or another—either because there is a new baby in the household or because the nature of the dwelling in which they live results in high heating costs—how far these regulations will allow them more help with heating.
Again, the whole question of insulation does not seem clear in the regulations. I think that this is a simple energy-saving matter, a simple question of allowing people to use their benefits more effectively, and that the Government should make it clear that they will meet the cost incurred by people on benefits in insulating the hot water tanks and roof spaces in their dwellings.
1138 Will the Minister also say whether it is true, as I read the regulations, that if, in future, someone has a local authority home help and the local authority imposes a charge, he will not be able to claim that back from supplementary benefit, but if he fixes up his own home help he may be able to claim back the costs in supplementary benefit. That seems to me to be an anomaly. I realise that the Government are reluctant to let local authorities push the cost back on to them. I hope that the Minister can tell us what the position is.
I have another instance of the yo-yoing of people between the Government and local authorities. I refer to housing. The regulations about special payments say that no payment may be made forany repair to local authority property.I assume that that covers council houses. There are many tenants in Stockport whose local authority claims to keep rents down but leaves a whole series of repairs as the responsibility of the tenant—such matters as garden gates, broken windows, and so on. For those on supplementary benefit it is very difficult to meet those costs. So far they have had occasional success in obtaining supplementary benefit to meet some of the charges.
People who live fairly near Manchester pay slightly higher rents, but Manchester has up to now included as routine certain repairs, such as broken windows and garden gates, within the normal repairs that it does. The slightly higher rents are paid by the supplementary benefit authorities without any difficulty.
I hope that the Minister will make it clear that in those areas where local authorities exclude certain repairs from the tenancy agreement, leaving them to the tenant, the supplementary benefit authorities will still be able to meet those needs. Otherwise, there is discrimination between one area and another, and it will be difficult for some people to have basic repairs done.
The Government should give a lead. They should say "There is a problem with unemployment. There are increasing difficulties for many people, and this is the Government's programme", but they are not saying that. They are saying that we are going back to the 1930s. The Government should remember that many people grew up in the 1930s and 1139 are bitter and scarred by their experience. We as a nation said that we never wanted to return to those conditions. We thought that we never would, yet now we have a Government who are bringing about increasing levels of unemployment as a deliberate policy, and at the same time destroying the safety net which is there to make sure that unemployed people do not sink back to poverty.
It is a sad day for the House when it has such a set of instruments before it, particularly as they are described as "up-rating", when in reality they are to reduce benefits.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine)
There are five hon. Members who wish to be accommodated in the next 45 minutes.
§ 8.3 pm
§ Sir Brandon Rhys Williams (Kensington)
I had not intended to take part in the debate, and I shall try to be brief. As it was only a few weeks ago that I obtained the leave of the House to introduce a Bill on the uprating of child benefit, it behoves me to take the opportunity at once to congratulate my right hon. Friend the Secretary of State for Social Services on his statement today, which is exceedingly helpful. I was not in the Chamber, but I understand that he said:We are committed to the child benefit system, and it is our intention, subject to economic and other circumstances, to uprate child benefit each year to maintain its value.That is very much the essence of what I was asking for in the speech that I made as recently as April, which I know was regarded as very controversial by quite a number of hon. Members at the time. But my right hon. Friend has made that announcement, and I want to take the opportunity to congratulate and thank him.
§ Sir B. Rhys Williams
The commitment to the future is the important thing. I want to make a particular point about that.
§ Sir B. Rhys Williams
I should like to develop the point that I am coming to, which I think the hon. Gentleman has not appreciated. Then, if he insists, I shall of course give way, in spite of what Mr. Deputy Speaker said before he called me.
The difficulty that child benefit has laboured under is that it was neither an insurance benefit nor a tax allowance. It was an amalgam of the old William Pitt tax allowance with the family allowance, which was always of an uncertain status and for many years was neglected when other social benefits were uprated.
Child benefit appeared to be going to suffer the fate that it was not due to be uprated with national insurance scheme benefits nor caught by the Rooker-Wise amendments in the tax system. What worried so many hon. Members—certainly on the Conservative Benches—was that we were not certain whether child benefit would be allowed steadily to fall behind or even be left out of the uprating systems in the future altogether. So my right hon. Friend's announcement today is a major breakthrough for those of us who have campaigned for child benefit to be regarded as an essential element in the social services. It has now arrived as a component of the minimum income guarantee. But it is still something of a special case, because the entitlement to child benefit is not related to contributions. It is a citizen's benefit; it is not paid in relief of need. It has a certain status of its own even now.
This leads me to a particular recommendation that I should like to make. It concerns the whole business of national insurance benefits. Hon. Members were arguing today that there should have been increases because, with inflation, contributions had risen so much that the national insurance fund was flush with money and the Government could have afforded to uprate the benefits. I think that it was the right hon. Member for Norwich, North (Mr. Ennals) who made that point. But it is not a logical argument, because the change has been made—it was inevitable, and we have all accepted it—that the fund is now paid not by flat-rate contributions but by earnings-related contributions. Therefore, it is really just another element in the income tax. Administratively, that point is made even clearer, because it is actually 1141 collected through the PAYE system on behalf of the Department of Health and Social Security.
We should now take the bull by the horns and scrap the national insurance system altogether, recognising that it has outlived its usefulness. In fact, there is no actuarial element left to relate what is paid in by contributors and what they are entitled to draw out. The whole farce of totting up members' contributions and assessing their eligibility for benefit on the basis of their contribution record has become mere hypocrisy and should be done away with.
In fact, what has happened to national insurance is that we have adopted a well-known Socialist principle. Contributions are based on the principle offrom each according to his abilitiesand the benefits are something liketo each according to his needs".However, national insurance benefits are related not to need but to status, because one is entitled, for instance, to a national insurance pension whether or not one has income of one's own. I think that that is a decided advantage, because it differentiates the national insurance benefit from the supplementary benefits, which are, unfortunately, still required by all too many millions of people.
If we were to scrap the whole national insurance system we should continue to pay the same benefits on the basis that citizens were entitled to receive these things according to their status. It might be child benefit, the pension, the invalidity allowance, widows benefit, or payments for those who are unemployed or those who qualify by their status in other categories.
I am sure that Labour hon. Members, who may not entirely like the drift of what I am saying, would not suggest that unemployment benefit, for instance, should be paid only to those who are destitute and should be withheld from those who have savings of their own.
§ Mr. Heffer
Let us get the historical record straight. The hon. Gentleman should know that in the first benefits Bills introduced in this House by the Labour Party all benefits were on a non-contributory basis. What the hon. Gentleman is suggesting is what the Labour Party first suggested a long time ago.
§ Sir B. Rhys Williams
If Mr. Deputy Speaker had not asked us to be brief, I would have sought to develop the theme that concern about improving the social services is not confined to one party. There are hon. Members on both sides of the House who do not take much interest in the development of the social services and equally there are those on both sides who make it a matter of primary concern.
If we decided to scrap the national insurance system, it could be argued that instead of having three roots of entitlement to benefits, namely, need, the contribution record, and citizenship, we should have only two, namely, citizenship—primarily—and need. As there are deficiencies in the national insurance system, an enormous supplementary benefit structure has had to be developed. Every year several million people go in and out of the supplementary benefit system. In addition, millions are in it all the time. That is a disgrace, because it is wasteful, humiliating and obsolete. We should tackle the supplementary benefit system now. We should consider whether it is possible to introduce a larger number of categories of those entitled to benefit because of their status, rather than because they can prove that they are destitute unless they receive an allowance each week. The citizenship qualification should be enjoyed by everyone eligible to pay income tax. If a person is eligible to pay income tax, he or she is a member of the British social service system.
I believe that we could greatly reduce the numbers of those requiring supplementary benefit. We must first consider the level of child benefit. It would be wrong to pretend that I am satisfied with the level of child benefit. However, I am pleased that the Government have accepted that it will continue to be uprated, and that it will not fall back. If case work on child benefit is to be eliminated, one should not have one level for the children of those with incomes and another for those who belong to very low-income households.
Child benefit should be raised so that it is equal to the level of supplementary benefit. That would be a considerable item of expenditure, but the cost could be met by adjusting the tax concessions to married couples when both partners 1143 are working and have no dependants. At present, such couples are very favourably treated by our system for the redistribution of income. Adjustments could also be made to the tax concessions of single wage earners who are not householders. That would mainly mean teenagers who live with their parents. Those categories may well enjoy child benefit in the future. Therefore, it would not be wrong if they were to make a larger contribution now, at a time when they can afford it.
If child benefit were raised to a point where it was the same whatever the circumstances of the family, it would have the enormous advantage of simplicity. A great amount of casework would be eliminated. Such a change would have the obvious moral advantage of fairness; and it would fully restore the incentives that occupy the minds of many people. It is all too often found, at present, that there is no point in working, because as one's income increases the loss of child benefits offsets what is gained in terms of income after tax.
I believe that another category of benefit should be introduced that would slash the numbers of those who have to apply for supplementary benefit. I should like a householder's allowance to be introduced as an automatic benefit. That would not, in fact, be an innovation, because many household subsidies have already been introduced in one form or another. Indeed, one or two of them sometimes seem to escape our notice. I wish to draw particular attention—as I have done before—to the concealed household benefit within the national insurance structure. As hon. Members know, the orders raise the single person's pension to £27.15, and a dependant's pension to £1630. But it is unattractive to have two categories of pension entitlement. Retirement pensions should be put on a unisex basis. If one paid both partners of a married couple in a pensioner household the same amount—let us say £16.30—it would not amount to the total that they now receive. The difference would amount to £10.85.
If I had longer in which to speak I would show how the situation has developed over the years. However, if one paid both parties £16.30 and paid the couple one allowance of £10.85, one 1144 would leave them exactly as they stand at present in terms of income. However, the allowance that I am suggesting of £10.85 is the type of householder's allowance that is already concealed within the structure of national insurance benefits. We should identify it as a separate element in the retirement benefit and put pensioners' entitlements on to a unisex basis immediately. One need not draw attention to the other benefits for householders under the Housing Finance Act 1972. Nor need one draw attention to the housing subsidies as regards local authority finance, building society finance, and so on.
An administrative task lies ahead of us. All household allowances should be put on a rational and administratively comprehensible and simple basis. I hope that the House will increasingly consider the introduction of a householder's allowance, such as has existed for several years in Germany. The amount could be varied according to the amount of rent paid, the locality or to other circumstances, if it were thought that that would reduce the amount of casework in supplementary benefit assessment.
The orders will bring in reforms. Of course, there are elements that hon. Members on both sides of the House do not like. The Government think it necessary to introduce such measures because of the economic circumstances and the cloudy future of our economy. An important social change is taking place. It is not only in Britain that this important social change is taking place. I believe that it is a change that is both dangerous and unattractive. It might be called the revolt of the strong against the weak, or the rebellion of the "haves" against the "have nots".
I do not know whether this change began in California or whether it arose spontaneously in all Western countries, but it is a fact. The change of attitude has come about because the "have nots" are now a minority. Even in the 1930s the "have nots" probably formed the majority in our democracy. However, that is no longer the case in Western countries. The weak tend to be minority groups, such as the disabled and those who have lost their savings or their jobs. They are a minority. It is the duty of democracy to take on the responsibility of looking after minority groups.
1145 I am sure that many hon. Members on both sides of the House are united in a sense of responsibility that makes them want to look after the minorities that we know to exist. I wish that there were a less partisan approach to the reform of the social services. The Select Committee has already begun to develop an atmosphere of comprehension and non-partisan dedication. I hope that that will bear fruit quickly. I also hope that the same attitude will be found in the House of Commons as a whole. The Government have given undertakings about the protection of minimum standards despite economic circumstances. Those undertakings are reassuring but much remains to be done. I hope that all hon. Members will work together to ensure that the necessary measures are carried out.
§ Mr. Frank Field (Birkenhead)
I am grateful to you, Mr. Deputy Speaker, for calling me. I have listened to the debate for four and a half hours with a rising sense of anger and despair—anger because we are debating regulations which vitally affect the poor, and it is becoming clearer how the poor will be treated by the regulations; and despair as a result of the speeches that have been made on child benefit, even by those who speak as friends of the scheme.
All speeches about child benefit have been prefaced by emphasis on the economic difficulties from which we now suffer. We have heard phrases such as "We cannot increase benefits until we produce the wealth," or "The economy is in a shaky condition." While it is right to look at the vertical distribution of the Government's Budget—the split between rich and poor—it is also vitally important to look at the distribution between those with children and those without children.
I wish to draw the House's attention to the point that my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) tried to make. We have suffered many lost opportunities on child benefit in this Parliament. We are not asking for more money to be spent. We are saying that, if families with children had had their fair share of the tax cuts, where would child benefit be today? In the Government's first Budget, taxation was cut by a record amount of £4.5 billion.
1146 Families with children received £8 million of that. Had families with children got their fair share last year, child benefit would now be standing at £5.75 per child. Had families with children received their fair share in this year's tax cuts, we would have been debating an additional 50p increase in child benefit—in other words, a child benefit of around £6.25 a week instead of the £4.75 that we are discussing under one of the orders.
Another way of making advances for families with children without asking for an increase in public expenditure would have been to take the total amount of the tax cuts that should have gone to families with children. In the first Budget in a per capita division of those cuts, there would have been an extra £1.9 billion in child benefit. That would have given us enough money to bring child benefit in at the higher rate of national insurance addition paid to children had we taxed the benefit. Had we done that, we would have been speaking about a totally different position facing all families with children, whether they be rich or poor.
We have heard a lot from Members on the Government Benches about their being the party of the family. Had they given families their fair share of the tax cuts, perhaps they could have held their heads up high and made that statement with some honesty. We would have been supporting, in a visible way, what many of us believe to be the cornerstone of a free society—the family unit. We would have been supporting the mothers who make the major decisions about the family in a practical way. But we chose to do otherwise.
Many hon. Members talk about the problems of families caught in the poverty trap. Had we got a fair share for families with children in the two Budgets of this Government, we would have made major advances in bringing families out of the poverty trap. We hear a great deal—more from one side of the House than from the other—about the "Why work?" syndrome. Had we got our fair share for families from the Budget, that would have been much less of a problem than it is for many families today.
We have heard much talk from hon. Members about the need to simplify the 1147 system. Of course, we would like these instruments to be written in intelligible English. But that is a dream, and we all know it. The best and most effective way of simplifying the system would be to make many of these orders irrelevant for large numbers of poor people. The way to have done that would have been to float them off means-tested assistance by giving in the tax cuts a fair share to families with children. We failed to do that.
Many hon. Members talk about extending freedom in the Welfare State. Had we got a fair share for families with children in the two Tory Budgets, we would have been a transformation of the scene. We would have seen a massive increase in child benefit payments and we would have begun to change the very nature of the Welfare State. The Welfare State could have been changed from a system that traps many people in poverty to one which lays a foundation for people to build on by their own efforts. It could have been reformed to enable it to work with human nature instead of against it.
We are used to the Secretary of State announcing cuts and therefore did not immediately understand the significance of his statement. Child benefit will now be on a par with other benefits and tax allowances. However, we have to regain the ground lost over the past couple of years.
§ Mr. Field
We hope that it is jam tomorrow. It certainly is not jam today.
When I first read the regulations dealing with single payments, I was not sure whether to laugh or cry. Had I been poor, I should have wept. I beg the Secretary of State to reconsider these regulations, if no other. His earlier intervention showed that he has no idea of what he is unleashing on the poor. He made the facile remark that the number of exceptional needs payments made 10 years ago was nothing compared with the number made last year. It was pointed out that possibly people are now more aware of their rights.
1148 However, more importantly, the face of poverty has changed in the past 10 years. First, it increasingly wears a young face. Families with children are on supplementary benefit. Secondly, people are on supplementary benefit for longer periods. The single payment regulation is horrendous for families and old people on supplementary benefits.
The regulations are based on work that Seebohm Rowntree did at the turn of the century, when he measured the relative poverty of children and adults largely on the work of the American nutritionist Atwater. The arbitrary assumption was that the needs of children were only half those of adults. That assumption, although at times slightly varied, has remained fundamental to our benefits system. The Government of the right hon. Member for Sidcup (Mr. Heath) commissioned two inquiries into the conditions of the long-term poor, the unemployed and the sick. Not surprisingly, the reports showed that those with children were most hard pressed. The evidence that the Supplementary Benefits Commission gave to the Royal Commission on the distribution of income and wealth also showed that in the Welfare State, if poverty pinches, it is for those families who have children.
However, regulation 27 of these wretched, vicious and expensive regulations states that exceptional needs payments will be made in future only when theneed has arisen otherwise than by normal wear and tearof clothing. However, under the existing regulations, last year and this about 400,000 payments will have been made, mainly to families with children who are in desperate need. That safety valve of the Welfare State is being closed and it appears that the Secretary of State is unaware of what he is doing to the poor. In the 14 months that I have been an hon. Member, I have learnt that one rarely shifts the Government once they have made up their mind and made a public announcement. However, if there is to be just one change in the 11 instruments that we are debating, I beg the Government to look again at the single payments regulations and at how they will affect families with children.
We have all had at our surgeries constituents who are desperate in their 1149 poverty and who do not know how they will make ends meet. We have been able to help them a little under the existing rules. Often those people almost blame themselves for their poverty and their failure. If the safety valve is closed, God help the poor, and God help us with what will follow socially in our society.
§ Mr. David Myles (Banff)
I am pleased to follow the hon. Member for Birkenhead (Mr. Field) because his expertise on child benefits and other matters, gained in a former position, is valuable to the House. I congratulate him on his speech and suggest that constant dripping may one day wear away a stone.
I am grateful for having been called, because, having sat almost mute opposite the hon. Member for Birkenhead in debates on the first Social Security Act 1980 and opposite the hon. Member for Stockport, North (Mr. Bennett) in debates on both Social Security Acts, I welcome the chance to say something about these instruments. I agreed to serve on the Committees on those Acts—if that is what one does here—because I felt that I needed experience of such matters. I have never been on social security, unless one regarded the hill livestock compensatory allowances as supplementary benefit.
Another reason why I agreed to serve on the Committees was that everyone to whom I spoke about political matters at any length before the election brought up the subject of social security. I do not know whether the political exposure given to the subject by my hon. Friend the Member for Aberdeen, South (Mr. Sproat), whose constituency is not far from mine, stimulated the concern or whether it was the natural compassionate feelings of the folk in the North-East of Scotland, but the vast majority of the electorate in that part of the country felt that we were allocating a disproportionate share of our national wealth to social security handouts. That opinion was certainly not confined to Tory voters.
Labour Members, especially the hon. Member for Stockport, North, may be interested to know that at least one hon. Member on this side supports the instruments, and I believe that many people outside support them.
I listened with interest in Committee to the arguments of Labour Members on 1150 why we should keep increasing expenditure, though they hardly mentioned where the money should come from. It must be remembered, however, that we are increasing spending, as my hon. Friend the Member for Watford (Mr. Garel-Jones) pointed out, from more than £15,000 million to, it is envisaged, almost £20,000 million, so we are not grabbing, taking away from or decreasing the considerable amount allocated to this purpose. The only part of the Government's spending which can be compared with it is the sum spent on the interest on the national debt, which was encouraged and increased by the Labour Government. I doubt whether we should get as much return from that spending as we do from this. The hon. Member for Birkenhead might get the increased benefits that he wants to see if we did not have to spend so much on the interest of those borrowings.
To be fair, the hon. Member for Fife, Central (Mr. Hamilton) had no doubt from where the money should come. He said, loud and clear, "Cut our defence spending." If we want to give our poor and needy the support they would get in Afghanistan, that might be a good idea. If we want to increase our borrowings, as the last Government did, so that the interest payments on the national debt outweigh the revenues from North Sea oil, that again is a possibility. If we want to divide the national cake now and pay no attention to the problems of our successors, that, too, is an option. If we want to soften up our people so that no one wants to work productively, we can carry out the profligate policies advocated by the Opposition.
But if we want to protect those in real need, if we want to be cost effective and to simplify the system so that not just the wise guys benefit, if we want to reduce fraud and the abuse of the system, if we want to encourage voluntary and compassionate organisations and at the same time encourage the wealth creators, we must support the Government in their sensible, courageous policy. It is the only one in the long run that will benefit those in need.
§ Mr. Reg Race (Wood Green)
We have just heard from the hon. Member for 1151 Banff (Mr. Myles) what can only be described as a Neanderthal speech. I commend the hon. Gentleman for having the political courage to make a speech which none of his hon. Friends has dared to make. If only for that reason, I commend him, although I did not agree with any part of his speech.
I want to correct the hon. Member on one major error. The Tories constantly argue that the health and personal social services budget and—as the hon. Member for Banff said—the social security budget have not been cut. Both propositions are totally fallacious. One has only to read the public expenditure White Paper published by his own Government to see that this is so. The social security budget has been cut by £1,084 million up to the financial year 1982.83 from the plans made by the previous Labour Government. That is clearly a major cut. Programme 11, dealing with health and personal social services, has also been cut by substantial amounts. The arguments of Conservative Members, that the social security budget has been increasing at a rate unsupportable by our economy, must be carefully examined. One of the reasons for the increase in the social security budget is the switch from child tax allowances to child benefit. The increase in child benefit and its move from tax allowances to social security has had a major effect on the size of the social security budget. A second major factor has been the demographic changes to which my right hon. Friend the Member for Sal-ford, West (Mr. Orme) has referred—namely, that old people are living longer and that there are more old people to whom more benefits have to be paid.
The third, and perhaps the most significant, argument is unemployment. When the Labour Party won the March 1966 general election, unemployment was at a post-war low of 260,000. It is now 1.89 million and rising. Last month's increase in unemployment will cost the DHSS about £275 million in benefits over a full year, which shows the extent to which the transformation of our society into an unemployed society is causing problems for the social security budget.
The argument is not that the benefits are too high but that changed economic and political circumstances have increased the social security budget. That is a 1152 different matter. If we want to cut the social security budget in a meaningful fashion, the way to do so is not to cut the benefits on which people rely but to cut unemployment. That could be the most significant single policy that the Government could carry out. Yet we see before us tonight these absurd and reactionary orders.
Conservative Members have tried to persuade the House that the sacrifices being asked of those receiving social security benefits are no greater than the sacrifices that, it is alleged, people at the top of the scale are making. That argument is absolute nonsense. Someone who will be denied an exceptional needs payment for shoes or clothing ought to know already the kind of treatment being given to other people in our society.
One sees the differential treatment clearly in the Budget Statement. A single person on £30,000 a year got £4,329 in tax relief from the Chancellor in the 1979 Budget and a further £613 in the 1980 Budget—a grand total of £4,942, before any wage increase. A married couple on £20,000 a year received £1,975 in tax relief in the 1979 Budget and an additional £402 in the 1980 Budget—a grand total of £2,377.
So that I cannot be accused of taking only people at the top end of the spectrum, I would also refer to a couple whose joint income is £10,000 a year, which is quite common these days. Someone in that position under the 1979 Budget received a tax handout of £348 and a further £61 in the 1980 Budget—a grand total of £409. The way in which people earning between £10,000 and £20,000 upwards are treated is different from the way in which social security benefit claimants are treated under the regulations. It is outrageous to pretend otherwise. I suspect that that is why the hon. Member for Banff is the only Government Back Bencher to support the regulations.
§ Mr. William Hamilton
My hon. Friend argues about priorities. When we were discussing the Social Security (No. 2) Bill I referred repeatedly to the Blue Book on defence. That book shows that we are finding £145 million for each nuclear submarine, which is slightly more than the sum which the Government are 1153 taking from old-age pensioners by deferring the pension increase for a fortnight.
§ Mr. Race
My hon. Friend is right. The Blue Book gives us the opportunity to examine the Government's priorities carefully. The replacement of Polaris by Trident is another example of the Government spending vast sums to blow us all to pieces instead of providing shoes, clothing and proper benefits for people in desperate need.
The Government might be able to convince us by their arguments if they could show that the scale of benefits is adequate to meet needs, including the need to replace household equipment. However, the scale rates are low and will not rise rapidly and many people who must exist on the scale rates for a long period find difficulty in replacing even the smallest household item. That will apply more as exceptional needs payments are withdrawn. I foresee that more supplementary benefit claimants will buy shoes and clothes from jumble sales, as some do already, and will not be able to rely on exceptional needs payments for a decent standard of living.
The proposals mean that about 750,000 people will be better off when the Act comes into force. However, between 1¾ million and 2 million social security benefit claimants will be worse off. People must understand that this debate is not about tidying up or about making matters simple. It is about cutting benefits. It is about another Government strategy to reduce the real living standards of the poor and their families.
The regulations are dangerous and divisive. The people at the sharp end will not be the Secretary of State or the Minister of State but the people in the local DHSS offices. They will be members of the Civil and Public Services Association and the Society of Civil and Public Servants, who will administer the benefit changes. They will be adversely affected. Claimants will ask them "Why cannot I have an exceptional needs payment for my kids' shoes?" Civil servants will have to explain that the regulations do not allow for that. Ten to one, the claimant will go away and say "Someone at the benefit office has a down on me".
The people at the sharp end will be the clerical and administrative staff in local offices. For that reason, I strongly 1154 support the point made by my hon. Friend the Member for Stockport, North (Mr. Bennett). People in DHSS offices should be protected. In every DHSS office there should be displayed an explanation of how benefits are worked out and how these regulations operate. If we can display such notices under the Offices, Shops and Railway Premises Act 1963 we can do it for social security regulations. We should display such an explanation as soon as the regulations come into force.
I hope that the Minister will take on board the serious points made by Opposition Members about the publication of a new supplementary benefit handbook. We should have that as soon as possible, given the chaos that is likely to ensue in social security offices when pension increases are implemented in November and when the changes in the regulations come into force.
This debate has been about the Tories cutting benefits to those least able to look after themselves. It is no good the Tories pretending that this legislation is anything but a fundamental attack on the rights of people on social security to a reasonable standard of living and their liability to protect themselves and their families against fortune which may have swept them out of work and on to supplementary or unemployment benefit. We must create a society—and we in the Opposition must argue for it—totally different from that envisaged in the philosophy of Conservative Members.
We must argue for a society in which income and wealth differentials are compressed and abolished as far as possible. That is the kind of society for which we should argue. I hope that we in the Labour movement will oppose these outrageous and reactionary measures with every ounce of force.
§ 9.2 pm
§ Mr. Reginald Freeson (Brent, East)
This debate has been one of the most depressing that I have sat through in this House. In the years during which I have been in this place, and in the years before I came here, when I followed matters from a distance, most of the arguments in this context—and many of them were heated—were about the pace at which improvements should be made and 1155 were not being made by successive Governments.
There were arguments during the period of office of the previous Labour Government, and former Labour Governments, just as there were under Conservative Governments, about the rate of change and about the improvement and enhancement of our social services and the social security system. The arguments have not been about those issues today. The arguments have been about the action of the Government in robbing pensioners, robbing the sick and robbing the disabled and others in the poorest and neediest sector of our society.
It is not mere rhetoric to say that. The Government are making specific and real cuts in benefits. We are no longer arguing about whether we should improve benefits; we are arguing about whether we should try to save the present level of benefits in real terms. The Government have decided to cut benefits sharply to many people in need.
We should be arguing, as we have done in the past—the right hon. Gentleman has joined in those arguments—about the way in which we can enhance our system and improve our social policy. Yet the past months have been taken up by arguments, advanced mainly by Opposition Members but also by some Conservative Members and people outside the House, in retreat. We have fought a rearguard action and have lost, as we shall lose tonight. We have argued about cuts in this area that are as mean as could have been imposed in certain sectors. I shall come back to that.
As has been said, what we are concerned with tonight is not an uprating order but a downrating order. The Government are deliberately reducing the value of benefits to millions of our worst-off citizens, following benefits of thousands of millions of pounds to the better-off and the best-off in our society in the past two Budgets.
I turn to more specific matters. The 16.5 per cent. increase in pensions that the Government are proposing is quite inadequate in the face of an inflation rate that is running at more than 20 per cent., and in the face of a surplus of nearly £700 million in the national insurance fund this year. A lengthy and unconvincing 1156 case was put to us by the Secretary of State for basing pensions and other increases on a 16.5 per cent. inflation rate.
As I listened to him, I was persuaded by him that he has got the jitters about the Government's inflation forecast. I think that he has really been saying to his colleagues inside Government" How can I lay an uprating order based on a 16½ per cent. inflation rate when we all know—the Government as well—that prices will have risen far more than that over the 12½ months up to 24 November"? Why else would the Chancellor have gone out of his way in the industry debate on 10 July to confirm the 16½ per cent. figure? The right hon. and learned Gentleman chose his words carefully, He did not say "I still think that 16½ per cent. is right", but rather:I see no reason to depart from the view that the movement in prices over the period in question will be 16½ per cent.".—[Official Report, 10 July 1980; Vol. 988, c. 798.]Those were strangely convoluted words to use, rather than the simple statement that the Chancellor could have made had he believed the figure. It will be very interesting indeed to see the detailed evidence on which that statement was based. The right hon. Gentleman may not have heard me when I spoke from a sedentary position during his speech. I again invite him to publish the working papers, or at least a summary of them, that passed inside the Government after this careful review and that led to the conclusion that an inflation rate of 16½ per cent. was still the forecast. We shall be interested to see the working papers that produced confirmation of that figure.
§ Mr. Patrick Jenkin
It is not for me to decide that. On the basis of the papers that I have seen, I undertake to get in touch with my right hon. and learned Friend the Chancellor to see whether that could be done, although my right hon. and learned Friend and myself would have to be guided by precedents. The right hon. Gentleman may have forgotten that I quoted from an article in the Financial Times, in which the writer recognised that most outside commentators thought that the Chancellor had got it right and that 16 £per cent. would be the figure. We are not alone in that view.
§ Mr. Freeson
No one is questioning the fact that the inflation rate will come down. Indeed, people said that long before these commentators recently made their comments. However, I was commenting not on the views of the outside commentators but rather on the views of the inside commentators. I appreciate that the Secretary of State cannot make a promise tonight, but I hope that as a result of his consultation with the Chancellor my request will produce results and that we shall see the working papers that confirmed that figure.
We must ask whether the Treasury experts are really telling the Chancellor that they still think that the rate will be 16½ per cent.—not 16½ per cent. on an annual basis, but for 54 weeks, which means about 16 per cent. per year. I think that the report in The Daily Telegraph of 20 June, quoting an outside commentator, was nearer the mark, when it said that confidential Treasury forecasts expected inflation to be running at 18 to 19 per cent. in the final quarter of this year. Frankly, I believe that the Secretary of State has been ordered by the Chancellor virtually to mislead the House. I believe that the Treasury's official forecast is still well above 16.5 per cent.
§ Mr. Patrick Jenkin
The right hon. Gentleman must accept that my opinion, which I have to express under the Act, is based upon my examination, and that of my advisers, of the Treasury forecast covering the 54-week period. The right hon. Gentleman has no right to say what he said, and I hope that he will withdraw his remark.
§ Mr. Patrick Jenkin
Does the right hon. Gentleman realise that he is making an accusation of bad faith on my part? Does he consider that that is appropriate in the House?
§ Mr. Freeson
In my opinion the Treasury has virtually instructed the Secretary of State to confirm the figure, and that is misleading the House. I phrased my remarks carefully. I shall restate them if need be, but that would waste the time of the House. I do not believe—and I do not think that anybody in the House believes—the figure of 16.5 per cent. When the Budget was presented, 1158 even its forecast allowed for a 2 per cent. margin of error. Now we are told, months later, that it is still precisely 16.5 per cent., even though at the time of the Budget there was a 2 per cent. margin of error in the calculations.
The Secretary of State said that the Government would give serious consideration to making good any shortfall if 16.5 per cent. inflation was exceeded, but he could not guarantee that. On the Second Reading of what is now the Social Security Act 1980, under which the orders are being introduced, he promised to protect the pensioner against price rises. The Under-Secretary repeated that promise several times in Committee. She said: "the Government have given a firm pledge that pensioners will be protected against increasing prices."
She said also that "the Government had given a pledge of their firm intention to protect pensioners"— note the words "firm intention"— "against price increases and to let them share in the increasing prosperity of the country."—[Official Report, Standing Committee E, 7 February 1980, c. 263.64.]
That implies a link with earnings.
The Minister joined in by giving "a guarantee to the pensioners in terms of prices."—[Official Report, Standing Committee E, 5 February 1980, c. 212.]
I understand that not long ago, in a private meeting with representatives of elderly persons' organisations, the Under-Secretary said that sympathetic consideration would be given by the Government should there be a shortfall. Is it to be a serious consideration, a sympathetic consideration, or a guarantee? Which of those three will it be? When will it happen—12 months later, or as early as possible in the 12 months following 24 November when it is seen that the shortfall has occurred? That would be the fairest method. It should be undertaken in the light of the promises that were made repeatedly both in debates in the House and in Committee, let alone what may have been said on platforms else-where.
§ Mr. Freud
Is the right hon. Gentleman aware that at about 8 o'clock there was notification on the Tape of a written question answered by the Minister, in which he explained the valuation down by £3 or £4 per week of the old-age pension in real terms? Is it not strange 1159 that that written question, which was published earlier today, was not referred to by the Secretary of State in the debate?
§ Mr. Freeson
I thank the hon. Gentleman for his intervention. I was not aware of that question having been tabled and answered. I look forward to seeing the text in full. It raises an important point. I presume that the question related to the real loss of value during the 12 or 18 months to date. It is a significant figure if it is correct. Perhaps we shall have further elucidation.
§ Mr. Patrick Jenkin
The right hon. Gentleman must not allow himself to be misled by the hon. Member for Isle of Ely (Mr. Freud). My hon. Friend was asked by how much the pension had lost value since it was last increased. The answer is that we shall put it up in November by enough to enable it to recover its value. However, the right hon. Gentleman has still not answered my earlier question. Is he charging me with saying that I do not believe the forecast to which I committed myself this afternoon? If he is saying that, he must say so clearly, and we can take the appropriate steps to deal with it in the manner in which these things can be dealt with in the House.
§ Mr. Freeson
The right hon. Gentleman may take all the appropriate steps that he wishes to take. I have said at length what I have said, it is on the record, and he can read it in the Official Report tomorrow. I suggest to him that the most effective step that he can take is to give a clear promise to the House and the country that if I am right and he is wrong, he will make good the shortfall promptly. That is what we require.
§ Mr. Peter Bottomley
It seems that the point that has been gone over twice rather unsatisfactorily needs elucidation. I accept that the right hon. Gentleman used a special form of words. Is he saying that the Treasury deliberately misled my right hon. Friend, or that my right hon. Friend was knowingly misled, or what?
§ Mr. Freeson
The hon. Gentleman has heard what I said. Let him and the right hon. Gentleman read the record. [Interruption.] The right hon. Gentleman is getting a little too agitated and protesting too much. I will say again 1160 clearly what I mean. I do not believe the 16½ per cent. figure to be correct. Let the right hon. Gentleman give an undertaking to the House and to the country on behalf of the Government, with the support of the hon. Member for Woolwich, West (Mr. Bottomley), that if I am right and he is wrong, the shortfall will be made good for the pensioners. That is what I have said several times.
There is only one person wriggling in this House tonight, and that is the person who will not give a promise to make good to the pensioners any shortfall that may occur towards the end of this year. I shall gladly give way to the right hon. Gentleman if he wishes to make that promise now. Let him give the answer. We are not concerned here only with pensioners. We are concerned also with other beneficiaries who are to suffer cuts.
These matters have been debated at great length both inside the House and outside. From now on people will know how to judge the liberalism of the right hon. Gentleman on these matters. We know what the conduct of the Government has been in practice, beyond the rhetoric of general election and pre-election speeches. We know that, for the first time in half a century, benefits are being cut in real terms for those who are most in need—the sick, the invalids, the industrially injured and old-age pensioners. I could name others.
If the Government will give an undertaking to make good the shortfall, at least some benefit will be gained from the debate, but so far that invitation has been refused. We must assume that when the shortfall occurs there will effectively be a continuation of the cuts. We must also assume, without a clear and unequivocal undertaking, that those who are to suffer the 5 per cent. cuts—even below the 16½ per cent. rate of inflation—as the basis of their benefits going up in November will also have their benefits cut permanently unless they are made good when they are taken into the tax net approximately two years from now.
I deal next with child benefit. We had what was taken by some to be an undertaking by the Secretary of State—a qualified undertaking. To me it was not a clear undertaking, because he did not make clear whether the shortfall would be made good. People in receipt of child benefit 1161 in the autumn will receive a 75p increase per week, instead of the £1.20 needed to keep pace with inflation. The right hon. Gentleman did not tell us that when this improvement takes place in the unknown future that loss will be made good and will operate from a sensible base instead of a downgraded base in child benefit. I do not take that to be an unequivocal undertaking.
It is not good enough, after the years of campaigning, or apparent campaigning, by the right hon. Gentleman and his colleagues on this issue to have that kind of fudgy statement, given in tones of a firm undertaking, but which, when one considers the words, is not such an undertaking. The House cannot find that satisfactory. However much people may have the wool pulled over their eyes for months and years, in the end they will not find that kind of statement in the House and elsewhere satisfactory.
A whole series of benefits will be cut and losses experienced under these regulations. About 190,000 pensioners will lose £1 a week because of the new rules on occupational pensions. Supplementary benefit will be cut for nearly 1,900,000 pensioners, sick and disabled people because of other changes in the regulations.
Overnight, 7,000 pensioners will lose their supplementary benefit—up to £30 a week in some cases—because they have capital of over £2,000. That figure was first proposed in the 1978 report on social assistance. Even if that figure were correct and sound then—and I would challenge it—it should be updated to £2,500 in line with inflation. No action is proposed on that figure, so people will lose considerably.
Not only are pensions and supplementary benefits being cut, but adult rates of unemployment, sickness, industrial injury, maternity and invalidity benefits are to be increased by 5 per cent. below the already questionable estimate of 16.5 per cent. inflation in November. That will mean weekly losses of between 90p and £1.95 for all concerned.
The cuts are being presented as "an interim measure in lieu of taxation". Two important points need to be made clear. First, across-the-board cuts are a crude and unjust substitute for taxation. Many claimants affected would not pay tax on 1162 their benefits if they had been brought into the tax net this year. Secondly, if the cuts in benefits, which could be repeated in 1981 and 1982 under the Social Security (No. 2) Bill—totalling a loss of about 14 per cent. or £20 a week—are "an interim measure in lieu of taxation", it must be fair and logical to restore the value of the benefits once they are brought into the tax net.
As I indicated, the Secretary of State said that the real value of the invalidity benefit will be restored once it is brought into tax "subject to availability of resources". That formulation could apply to any and every action of the Government in every sphere, so making the statement effectively meaningless. The right hon. Gentleman refused to give even this equivocal assurance for the unemployment, sickness, maternity and injury benefit cuts that are being implemented by the Government. Once the benefits are brought into tax, the yield should exceed the savings made by cutting benefits. In justice, the first call on this money should be to restore the real value of the benefits. Without such a commitment, we must conclude that this so-called "interim measure" marks a permanent cut in benefits.
The combined effect of the cuts in flat-rate benefit supplements and the abolition of the earnings-related supplement will mark a clear step back from the long-term goal, ostensibly shared by all political parties, of reducing dependence on means-tested supplementary benefits—one of the main themes of the 1978 review of social assistance, on which the regulations are supposedly based. Well over 100,000 more people will be pushed on to supplementary benefit as a result of the actions being taken under these regulations. When I say "well over", we must bear in mind that that 100,000 or more will be added to by the increasing level of unemployment from which the country is suffering.
Before I ended, I had it in mind to put a number of specific questions, but time has gone on. So it will be the intention of Opposition Members, myself included, and, I trust, also Conservative Members, to follow through with the Secretary of State detailed questions on a variety of aspects of the regulations and the instruments before us tonight. However we protect and vote tonight, the 1163 Government will get their way. At this stage there is one thing on which it is important to get an assurance and which we must be prepared to follow up. That is the closest possible detailed monitoring of the effect of these regulations and orders generally, so that we can persuade the Government to change them as quickly as possible should things go wrong in a bigger way than we are expecting in this debate, or as badly as we are expecting in some of our remarks, for the many hundreds of thousands of poor people who will be affected.
I cannot end simply by calling for that close monitoring and by declaring that a number of us will follow through with a variety of detailed questions on which we have notes but have not had time to put forward during the debate. I expressed my deep depression about the nature of this debate at the start of my speech. I end by declaring clearly that in my view—and I say it again—the Government are knowingly cheating millions of the poorest people in our community of some of their welfare benefits. That is what these orders and regulations are really about—attacking the very people in need of greatest protection.
The Government's posture and policies are encouraging a campaign and an attitude of hostility—the revolt of the strong against the weak; an attitude of hostility against poor people and the welfare services on which they depend. Such hostility has been elevated to a political virtue in some quarters on the Conservative Benches. We are going through a shameful period. We are becoming a less generous people.
That is what these orders and regulations represent, and that is why we shall vote against the Government tonight. That is why we have chosen to vote upon item No. 8 on the Order Paper, the single payments regulations, because this is the meanest and most vicious of the Government's actions. It is referred to as the single payments amendment, whereby people who are in need of clothing grants will have them virtually cut off, and whereby the Government are going against the recommendations of the social assistance review report of 1978, which said that we should discipline the system and remove the discretion but 1164 recommended that it should be done by introducing regular lump sum payments for those in need who have been getting ad hoc payments up till now. That is what could and should have been done.
We can only conclude that once more it has been decided inside the Government to make a surreptitious cut of some significant kind in expenditure on those who are most greatly in need. If we are overstating the position, it is possible for the Minister to give us a calculation of the savings that will be effected in the total budget by this move on the Government's part. We shall vote against it. We have chosen the single payments instrument deliberately, because, as I say, it is the most vicious and the meanest of the lot, however much we criticise the others. That is why we shall vote against it. We hope to see a time come again when this Parliament and political parties in this country generally, in the spirit of the remarks of some Conservative Members, will debate as heatedly as we all would wish improvements and advances in social policy—not rearguard actions, not defeats, not cuts, and not a tax on the poor and needy, as represented by the Government's policies before us tonight.
§ The Minister for Social Security (Mr. Reg Prentice)
I am deeply sorry to say that the House has just listened to a cheap, nasty and thoroughly disgraceful speech. When the right hon. Member for Brent, East (Mr. Freeson) said that my right hon. Friend the Secretary of State for Social Services had given the 16½ per cent. forecast today because he was virtually ordered to do so by the Treasury, that was a clear implication that my right hon. Friend was acting in bad faith. I ask the right hon. Gentleman to reconsider that, to rise now, if he will, and to withdraw it.
As the right hon. Gentleman does not do so, I put to the House the reasons why we who care about the reputation of the House will expect a statement from him later this week, when he has had time to reflect on what he said and when he has had a chance to read again what he said and to read again what my right hon. Friend said. I remind those who were in the House at the beginning of the 1165 debate that my right hon. Friend set out in detail and in depth his exact statutory duty. He has a duty to recommend an uprating of pensions based on his estimate of what is the nearest possible figure that can be arrived at for restoring the value of the pensions as they were in 1979—not the Treasury's figure or the figure of my right hon. and learned Friend the Chancellor, but his figure; not the figure that was worked out at the time of the Budget but a figure in which he has confidence today.
My right hon. Friend explained to the House the doubts that he had entertained a few weeks ago as to whether the 16½ per cent. would still be the correct figure to be the basis of his recommendation today. He then explained the reasons why he now believed that it was right. He referred to the decline of the wholesale price index from January onwards. He referred to the fact that the retail price index had already peaked. He referred to the CBT survey of the intentions of firms and the fact that a fewer number of firms than at any time since 1973 proposed to raise their prices in the next four months. He referred to those facts and then said that he had come, after all that consideration, to the 16½ per cent. figure.
As my right hon. Friend's colleague and his friend, I can testify to the way in which he has agonised over this problem in recent weeks. He is an honourable man, and he made an honourable statement to the House. To imply otherwise is disgraceful. I urge the wiser and more sober members of the Opposition to have a word with the right hon. Gentleman and suggest that he should withdraw that disgraceful allegation. I give him another opportunity so to do. As the right hon. Gentleman does not intervene, I shall proceed to the rest of the debate, and shall ignore anything else said by the right hon. Gentleman.
This has been a wide-ranging debate. Eleven main sets of regulations or orders are before the House, many of them breaking new ground, new ground that arises from the major social security legislation of this Session, on which the House, both on the Floor and in Committee, spent over 200 hours in debate, and on which also a great deal of time was spent in another place. Inevitably, there 1166 has been a kind of selective replay of some of the arguments that were advanced during those hours. I can make only a very selective reply.
I should like to concentrate at the beginning on commending to the House, with enthusiasm, the changes in the structure and the methodology of the supplementary benefits system. The fact that change was overdue was recognised by the last Government, is recognised by the present Government, and was recognised by the Supplementary Benefits Commission and by everyone who has had anything to do with the subject.
The main reason for recommending the changes with enthusiasm has been given by my right hon. Friend. They represent a considerable change of emphasis away from discretion and towards entitlement. It is a far more dignified system in terms of the needs of the human beings concerned than we have ever operated.
The requirements regulation and the single payments regulation build up the individual's entitlement in a structured way. In regulation 4 of the Supplementary Benefit (Requirements) Regulations 1980 there is a definition of "normal requirements". The definition covers the necessities of life, which vary from obvious items such as food, household fuel and the purchase, cleaning and repair of clothing and footwear to leisure and amenity items such as television licence and rental, newspapers confectionery and tobacco. The additional requirements cover such matters as heating costs, diet, hospital fares, hire purchase requirements and so on. On top of that, there are the housing requirements. In addition, single payments are defined under various headings such as maternity needs, funeral expenses, the nine separate categories of housing expenses, household expenses and miscellaneous expenses.
The ultimate fall-back comes in regulation 30, which gives a discretionary power—under narrowly defined terms—to meet needs that are outside the other categories. This is the most structured form of support that society has ever provided for those in greatest need. It should be commended because it represents an advance for human dignity.
§ Mr. Prentice
I shall explain that in a moment, but the right hon. Genlteman's figures are wrong.
The second reason for believing that this measure represents a social reform of considerable value is that it introduces a more open system that is simpler to understand. The individual claimant and the claimant's advisers can more accurately check whether the claimant is getting what he is entitled to. The individual can understand what he is entitled to, and there will be a structured system of appeals.
§ Mr. Ennals
My right hon. Friend the Member for Salford, West (Mr. Orme) gave some figures. The right hon. Gentleman said that they were wrong. It would help if the right hon. Gentleman could tell us what the correct figures are.
§ Mr. Prentice
I should be able to do so more rapidly if I were not subjected to unnecessary interventions.
The regulations are inevitably set out in legalistic terms. That is necessary, because we are defining precise entitlements under the law. The hon. Member for Barking (Miss Richardson) said that they were gobbledegook. I have some sympathy with her, but we wish to establish legal entitlements that will be subject to legal appeals. Therefore, such language is essential.
First, we are committed to a revision of all our explanatory leaflets. Secondly, we are committed to issuing a new edition of the supplementary benefits handbook. Thirdly, we are committed to issuing a written notice of entitlement to each claimant, and to explain the way in which it has been built up. I hope to have all that completed when the scheme comes into operation in November. We shall try to complete it earlier, but the House will be aware that the regulations do not complete the job. Other regulations on other aspects need to be produced. The explanatory work cannot be completed until the regulations have been completed. However, we shall proceed as quickly as possible, and we shall do everything that we can to have it ready in time.
§ Mr. Prentice
Yes, but there are the operational problems to which I have referred. There will then be the problem of getting the printing done. We will do it as quickly as we can—that is better from every point of view, most of all that of the claimants. A set of the explanatory leaflets will be available in local offices and claimants can get them on demand.
The system will be underpinned by a new system of adjudication by which the claim will be settled originally by a benefits officer, with an appeal to a local tribunal, and a further avenue of appeal to the social security commissioner. This is parallel to the system that has stood the test of many years in the main insurance field.
The third reason for commending these changes to the House is that they provide a simpler and fairer structure of benefits on a nil-cost basis. Any realistic assessment of the situation must involve recognising the need for this to be done on a nil-cost basis. On such a basis clearly some people will lose on balance. They will not suffer a cut in benefits, but their uprating in November will be a little less than it otherwise would have been. Others will gain on balance in the sense that their uprating will be more. The figures that we have given to the House show that 1¾ million people will lose on balance, ¾ million will gain and ½ million will remain unchanged. The fact that those who lose on balance are more numerous than those who gain simply reflects the fact that the losers will lose comparatively little and the gainers will gain comparatively more.
We are attempting here to give extra help to some of the most vulnerable groups, such as the 98,000 people who will move from short-term rates to long-term rates in one year instead of two. This will include a number of disabled people and a number of one-parent families as well as others whose needs are of great concern to us. Others who gain on balance will be the 340,000 families with children who will gain from the fact that we are reducing the number of children's scale rate from five to three. That involves a levelling-up process rather than a levelling-down process. Therefore, there 1169 will be more help, particularly for families on supplementary benefits who have a number of children. It is among those families that some of the greatest poverty has occurred.
§ Mr. Orme
Coming back to the figures, because short-term rates will not be brought into line with national insurance benefits, there will be about 200,000 to 230,000 claimants who will not now be gainers. They must be taken off the numbers that the right hon. Gentleman has just given to the House. If we take into consideration the dependants of the losers—families with two children and the wives—the end figures are ½ million gainers and 2½ million losers. Does the right hon. Gentleman contradict those figures?
§ Mr. Prentice
The combined view of the Treasury Bench is that the right hon. Gentleman is a little mixed up. However, we can pursue this by correspondence. The essential point on which we agree is that there are gainers and losers and that those who are gaining are those in the greatest need, the most vulnerable in society for whom we wanted to do more.
Some doubt has been cast on the views of the Supplementary Benefits Commission about these changes. I shall quote to the House the statement of welcome for these changes made by the SBC on 29 November 1979:We particularly welcome the proposal that the rules governing entitlement to benefit should be set out in full in an Act and in regulations. These rules will emphasise entitlement and replace the Commission's present discretionary powers. As we said in our response to the supplementary benefit review report, The proper forum for debate on the rules affecting supplementary benefit claimants is Parliament.The remarks continued:We are also pleased to see the proposals for changes which will provide more benefit for families, a shorter qualifying period for those eligible for the higher long-term rates … and equal treatment for men and women.Other reasons are also given for welcoming our proposals. Most objective observers will agree that we have begun the process of producing a more rational, logical and fair system of supplementary benefits although much remains to be done.
I shall turn now briefly to some of the other points raised. My hon. Friend 1170 the Member for Brighton, Kemptown (Mr. Bowden) and others expressed doubt about the date of the 1981 uprating. The provisions of the Social Security Act 1980 require the 1981 uprating to take place not later than the week beginning 23 November. It would not be in accordance with the law for the uprating to be later than that.
Several hon. Members mentioned the national insurance fund and the Government Actuary's forecast. I emphasise that the Actuary was making a forecast three months into the financial year. My right hon. Friend explained that the balance depends on the relationship of two enormous totals, which can be considerably varied by small percentage changes. The forecast of £687 million does not mean that there will be a surplus of £687 million. Many factors could alter that figure, particularly the rise in unemployment. A rise of 100,000 in the number of unemployed means a downward movement of about £180 million in the fund. It has been suggested that the large surplus could lead to a revision of the up-rating in November or payment for other benefits, but against that background such suggestions are not in touch with reality.
Many hon. Members also mentioned child benefit. My right hon. Friend has made a commitment that, subject to economic and other circumstances, child benefit will be uprated each year to maintain its real value. That commitment was broadly welcomed. My right hon. Friend intervened in the speech of my hon. Friend the Member for Woolwich, West (Mr. Bottomley) to state that in the public expenditure programme from now on child benefit would be included under the social security heading rather than being an item financed from the contingency reserve. Many hon. Members have been pressing for that to happen and will therefore welcome the statement.
Turning briefly to the question of a possible shortfall in pension and other benefit upratings this November, I again repeat what my right hon. Friend said, for the benefit of those hon. Members who were not in the Chamber. We shall give serious consideration next year to making good from then on any significant shortfall, having regard to economic and other circumstances then. In view of what my hon. Friend the Member 1171 for Kemptown and others have said, it is important to underline the word "then". The possibility would be adjustment from November 1981 and not a backdated adjustment. There has never been a question of backdated adjustments under any Government.
That brings me back to the 16½ per cent. forecast. With the exception of the right hon. Member for Brent, East, who made an unfortunate speech, hon. Members on both sides were content to accept the statement of my right hon. Friend in his opening speech. The question to which the House must address itself is what the rate of inflation will be after November this year and how soon, and at what rate, the new benefits will be eroded. My hon. Friend the Member for Kemp-town pointed out the devastating effect on pensioners' savings and morale of inflation at the rate that we have experienced in recent years.
Part of the answer must lie in the nature of the increases in wages and salaries in the next pay round.
§ Mr. Prentice
Nothing of the sort. However, any hon. Member who is sponsored by a trade union has a duty not merely to take advice from that union but to give advice back. One thing that should be made clear is that it is no use trade union conferences passing resolutions in support of increases for pensioners if they pass resolutions the next day in favour of massive wage demands that would undermine the value of the pound in the pensioner's purse.
Another part of the answer lies in the need for the Government to keep firmly to their targets for public expenditure and public borrowing. Unhappily, we have had to listen again to the usual dreary chorus of mock indignation from the Labour Benches about cuts—an easy word that trips off the tongue. We have all used it.
§ Mr. Prentice
It is a curious use of language in relation to the package of proposals contained in the instruments, which amount to total extra public expenditure of £3 billion in a full year. Of 1172 course, a small percentage of that sum has been shaved off by the proposals of the No. 2 Act and other economies agreed by the Government and approved by the House.
§ Mr. Prentice
That is an inevitable part of the reining back of public expenditure which is at the centre of the Government's strategy. That involves bringing down the level of public expenditure by 4 per cent. in real terms between now and 1983–84.
No part of the community has a greater stake in the success of our struggle against inflation than the pensioners and the other groups we are discussing.
§ Mr. Prentice
It is clear that, by repeated commitments to higher expenditure, the Labour Party has opted out of that struggle. Labour Party overspending has gone through three stages. Mark I overspending was the overspending of the Labour Government in office—going up year after year, up by 5½ per cent. in the 12 months before the general election and planned to rise further. Labour overspending Mark II consists of the promises made and inferred as a result of the proposals from Labour Benches and the Labour amendments moved in Committee. On the first Social Security Bill alone, the Opposition amendments would have cost an extra £2½ billion in a full year.
We saw earlier this month Labour overspending Mark III. On 10 July, the Labour Party issued its draft manifesto. It has not been mentioned much, but it is an essential part of the debate. It carries the process a good deal further. Item after item in the social security section as well as in other sections of that manifesto amount to massive proposals for additional public expenditure. A fairly modest example is the cost of restoring earnings-related supplement at £385 million a year. Another relatively modest example is to put up child benefit to £6 a week, costing £680 million a year extra.
To get on to the more ambitious proposals, it is proposed to establish a new disablement allowance varying with the 1173 severity of the disablement. If that is intended to be at the current rate of war pensions and only for people who are 80 per cent. disabled or more, it will cost £½ billion a year. If "varying degrees of disablement" means 20 per cent. disablement upwards, it will cost up to £3 billion a year. On pensions, there is what is called a target. I take it that the word "target" is meant to be a more modest objective than a firm proposal. The target recommended is that the pension for a married couple should be half the gross average wage and that for a single person one-third of the gross average wage. At current prices that would cost an extra £7 billion a year.
This is only the beginning, of course. Those of us who study Labour Party terminology have to get used to a new phrase, the "rolling manifesto". In other words, we are to have a new version of this at least once a year. It means that we shall have three or four more of them between now and the next general election, each one no doubt raising the stakes, each one no doubt making more and more concessions to the militant Left, and each one no doubt promising more benefits costing even more money.
This is the Labour Party labelling itself the party of hyperinflation. It is no use the Opposition in a debate such as this pretending that they care about the pensioners or the chronic sick. It will be no use, tomorrow, their shedding crocodile tears over unemployment, because hyperinflation will be the mother and father of higher unemployment. The fact is that their recipe is a recipe of disaster for everyone, especially for the weakest members of our community.
§ Question put and agreed to.
§ That the draft Social Security Benefits Up-Rating Order 1980, which was laid before this House on 17 July, be approved.1174
§ That the draft Family Income Supplements (Computation) Regulations 1980, which were laid before this House on 17 July, be approved.
§ That the draft Child Benefit (Up-Rating) Regulations 1980, which were laid before this House on 17 July, be approved.
§ That the draft Pensioners' Lump Sum Payments Order 1980, which was laid before this House on 17 July, be approved.
§ That the draft Social Security (Benefit) (Married Women and Widows Special Provisions) Amendment Regulations 1980, which were laid before this House on 17 July, be approved.
§ That the draft Supplementary Benefit (Resources) Regulations 1980, which were laid before this House on 17 July, be approved.
§ That the draft Supplementary Benefit (Requirements) Regulations 1980, which were laid before this Houses on 17 July, be approved.—[Mr. Patrick Jenkin.]
§ Motion made, and Question put,
§ That an humble Address be presented to Her Majesty, praying that the Supplementary Benefit (Single Payments) Regulations 1980 (S.I. 1980 No. 985), dated 14 July 1980, a copy of which was lai before this House on 17 July, be annulled.—[Mr. Orme.]
§ The House divided: Ayes 245, Noes 312.